Weighing the Options of Refinancing
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It has been said that only if your new interest will be at least 2 points under your current rate, should you refinance your mortgage. That may have been true a while back, but since refinancing has been costing less in recent years, it's a good time to consider a new mortgage! Refinancing has a variety of advantages that can make it worth the initial expenditure many times over.
Advantages
You could be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage loan. Additionally, you might be given the option of pulling out some of the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage, enabling you to build your equity faster.
The Cost
As you probably expect, you will have some fees and expenses during the the refinance process. You will have to pay the same types of fees as with your current mortgage. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to reduce your interest rate. If you pay (on average) three percent of the loan amount at the start, your savings for the term of the new mortgage loan can be great. Please talk to a tax professional before acting on rumors that any points paid can be deducted on your federal income taxes.
Another expense that borrowers might take into account is that a reduced rate of interest will lower the interest amount you will deduct on your taxes. Call us at 312-806-9309 to help you do the math.
All things considered, for most borrowers the total of initial costs to refinance are paid back very quickly in savings each month. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 312-806-9309 to get you started.
Curious about refinancing your home? Give us a call at 312-806-9309.
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