Weighing the Options of Refinancing
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Some have said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. That could have been accurate a while back, but as refinancing has been costing less in recent years, it is never the wrong time to explore the options of a new mortgage! A refinanced mortgage can be worth its cost many times over, factoring in the advantages that may come, along with a lower interest rate.
You may be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with a refinanced loan. You might also have the option to "cash out" a portion of your home equity, which you can use to take care of higher interest debt, add on to your home, or finance a vacation. You could have the option to refinance into a shorter-term mortgage loan, enabling you to build your equity quicker.
Fees and Expenses
As you probably know, you will have to pay for your process of refinancing. With your refinance, you are paying for most of the same things you paid for during your existing mortgage. These might include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying points can help you attain a better interest rate. If you pay (on average) 3% of the loan amount initially, the savings for the term of the new loan can be significant. We recommend that you consult a tax professional before acting on advice that the paid points can be deducted on your taxes.
An additional expense that borrowers may take into account is that a reduced interest rate will reduce the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 310-379-5997.
All things considered, for most borrowers the amount of initial costs to refinance will be paid back soon in monthly savings. 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 next couple of years, and your available cash. Call us at 310-379-5997 to get you started.
Curious about refinancing? Call us at 310-379-5997.
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