Weighing the Options of Refinancing
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Ever hear the old rule of thumb that says you should only refinance if your new interest rate is at least two points under your present one? Maybe several years ago that was good advice, but as refinance costs have been falling recently, it may be a good time to take a serious look. Refinancing your mortgage loan has various benefits that will often make it worth the up-front cost many times over.
Advantages
When you refinance, you could be able to lower your interest rate and mortgage payment , perhaps considerably. You might also have the option to "cash out" some of your home equity, which you may use to consolidate debts, improve your home, or plan a vacation. With reduced rates, you might also be able to build your home equity faster by moving to a shorter-term mortgage.
Expenses and Fees
As you probably expect, you will have to pay for your process of refinancing. With your refinance, you're paying for a lot of the same things you were charged for during your existing mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying points can get you a lower interest rate. When you pay (on average) three percent of the mortgage loan amount up front, your savings for the term of the new mortgage loan can be significant. You may hear that the points may be deducted on your income taxes, but since tax regulations are ever-changing, please consult with a tax professional before depending on this.
Another expense that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 718-766-9112.
Most people find that the savings each month quickly outweigh the initial expenses of refinancing. We'll work with you to determine which program is the ideal fit for you, considering your cash on hand, the likelihood of selling your home in the near future, and how refinancing could effect your taxes. Call us at 718-766-9112 to get you started.
Want to know more about refinancing your home? Call us at 718-766-9112.
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