When is Refinancing Worth it?
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It has been said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your loan. That might have been sound advice a while back, but with the fact that refinancing has been costing less recently, it's never the wrong time to consider a new mortgage loan! Refinancing has various advantages that often make it worth the up-front cost a few times over.
When you refinance, you could be able to reduce the interest rate and monthly payment amount, perhaps by a lot. You also might have the option of pulling out some of your home equity by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build your home equity more quickly by changing to a shorter-term loan.
Expenses and Fees
All these benefits do come with some expense, though. You will be charged the same sort of expenses and fees as you did with your current mortgage 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. If you pay (on average) 3% of the loan amount initially, your savings for the term of the refinanced mortgage loan can be substantial. Please talk to a tax professional before acting on advice that the points paid may be deducted on your taxes.
Speaking of taxes, if you reduce your interest rate, of course you'll also be reducing the paid interest amount that you may deduct on your taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at 310-379-5997.
Most people find that the savings per month outweigh the up-front expenses of refinancing. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 310-379-5997 to get you started.
Curious about refinancing? Call us: 310-379-5997.
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