Is Refinancing Worth the Cost?
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It has been said that only if your new interest is at least two points lower, should you refinance your mortgage. Perhaps several years ago that was sage advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinance can be worth its cost many times over, because of the benefits that come, as well as a reduced interest rate.
When you refinance, you might be able to lower your interest rate and mortgage payment , sometimes significantly. You could also have the ability to "cash out" some of the built-up equity in your home, which you are able use to consolidate debts, improve your home, or take a vacation. With reduced rates, you may also be able to build up home equity more quickly by switching to a shorter-term loan.
Fees and Expenses
Of course, you will have some fees and expenses during your the refinance process. You will be charged the same sort of fees as you did with your current mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
You could need to pay points (prepaid interest) to attain a better rate of interest. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the new mortgage can be substantial. You might be told that these points may be tax deductible, but since tax regulations are difficult to keep up with, please speak with your tax professional before depending on this.
Another thing about taxes is that when you bring down your interest rate, it follows that you'll also be reducing the interest amount that you can deduct on your federal income taxes. This is another cost that some borrowers take into account. Call us at (303) 877-0415 to help you do the math.
All things considered, for most borrowers the amount of up-front costs to refinance are paid back soon in savings each month. We'll help you determine which program is perfect for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will have on your taxes. Call us at (303) 877-0415 to get started.
Want to know more about refinancing your home? Give us a call: (303) 877-0415.