Weighing the Options of Refinancing

Ever heard the old rule of thumb that states you should only refinance if the new interest rate is at least two points under your present one? That may have been valid years ago, but since refinancing has been costing less recently, it's never the wrong time to consider a new mortgage loan! A refinanced mortgage can be worth its cost several times over, considering the benefits that it brings, as well as a lower interest rate.

Benefits

You could be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage. You could also have the option to "cash out" a portion of your equity, that you will be able use to consolidate debts, improve your home, or take a vacation. With lower interest rates, you might also get the chance to build your home equity faster by moving to a shorter term loan.

The Cost

As you probably expect, you'll have some fees and expenses during your process of refinancing. You'll be charged the same kinds of fees as with your current mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

Paying discount points can result in a better interest rate. The amount you'll save on the life of the mortgage loan may be significant if you've paid up front about 3% of the new loan balance. You may be told that these points can be deducted on your income taxes, but since tax regulations can be ever-changing, we urge you to consult with your tax professional before depending on this.

An additional expense that a borrower might consider is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 678-494-8250.

Most people find that the monthly savings outweigh the initial expenses of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 678-494-8250 to get started.