Weighing the Options of Refinancing

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Some have said that only if your new interest is at least two points lower, should you refinance your mortgage. That could have been true years ago, but since refinancing has been costing less over the last few years, it's never the wrong time to consider a new loan! A refinanced mortgage loan is often worth its cost several times over, factoring in the benefits that can come, in addition to a reduced interest rate.

Benefits from Refinancing

You could be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with a refinanced mortgage. You could also be able to "cash out" some of your home equity, which you may use to consolidate debt, make home improvements, or take a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to build your home equity quicker.

The Cost

Of course, you'll have to pay for the the refinance process. You will be charged the same sort of fees as with your existing mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might think about paying points to receive a better interest rate. Your savings on the life of the mortgage may be substantial if you've paid up front about 3% of the new loan balance. Please talk to a tax professional before acting on advice that these points paid may be deducted on your federal income taxes.

Speaking of taxes, when your interest rate is lowered, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is another cost that some borrowers take into account. Call us at (334) 285-8850 to help you do the math.

Most borrowers find that the monthly savings quickly outweigh the initial expenses of refinancing. We will help you determine what mortgage loan program is ideal for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing can effect your taxes. Call us at (334) 285-8850 to get you started.

Curious about refinancing? Call us: (334) 285-8850.

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