When is Refinancing Worth it?
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Ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least 2 points under your current one? That may have been accurate a while back, but as refinancing has been costing less in recent years, it's a good time to consider a new mortgage! A refinanced mortgage loan may be worth its cost several times over, factoring in the benefits that can come, in addition to a lower interest rate.
You may be able to bring down your interest rate (sometimes by a lot) and have smaller monthly payments with your refinanced mortgage loan. You also could have the option of tapping into the equity in your property by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build your home equity more quickly by changing to a shorter term mortgage.
Expenses and Fees
Of course, you'll have to pay for the process of refinancing. You will have the same sort of fees as with your existing mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can result in a better interest rate. The amount you'll save on the life of the mortgage might be significant if you've paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.
Another thing about taxes is that if your interest rate is lowered, naturally you'll also be lowering the paid interest amount that you can deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at 310-379-5997.
Most borrowers find that the monthly savings quickly balance out the up-front cost of a refinance. We'll help you figure out which mortgage loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing will probably have on your taxes. Call us at 310-379-5997 to get started.
Curious about refinancing your home? Call us: 310-379-5997.
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