Weighing the Options of Refinancing
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It has been said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe that was good advice a number of years ago, but as refinance costs have been getting lower, it may be time to take a serious look. Refinancing your mortgage loan has some advantages that will often make it worth the up-front cost several times over.
You could be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage loan. Additionally, you might have the option of tapping into the equity in your house by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You may have the option to refinance into a shorter-term mortgage program, giving you the ability to add to your home equity quicker.
Expenses and Fees
All these benefits do come with some expense, though. You'll have to pay the same sort of expenses and fees as you did with your current home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can get you a better interest rate. Your savings over the life of the mortgage loan could be significant if you've paid up front about three percent of the new loan total. You might hear that the points may be tax deductible, but because tax regulations are ever-changing, please speak with your tax professional before depending on this.
One more expense that borrowers might consider is that a reduced rate of interest will lower the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at 310-379-5997.
Most borrowers find that the savings each month quickly balance out the initial cost of a refinance. We will work with you to figure out which mortgage program is right for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and what effect refinancing will have on your taxes. Call us at 310-379-5997 to get started.
Want to know more about refinancing? Call us at 310-379-5997.
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