Is Refinancing Worth the Cost?
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Shopping for a mortgage? We will be glad to help! Call us at 516-431-2009. Ready to get started? Apply Now.
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Ever heard the pearl of wisdom that states you should only refinance if your new interest rate will be at least two points lower than your current one? Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it could be time to look into it. A refinanced mortgage loan may be worth its cost several times over, because of the benefits that come, along with a lower interest rate.
Advantages of Refinancing
When you refinance, you might be able to reduce your interest rate and mortgage payment , perhaps considerably. You might also have the ability to "cash out" a portion of the built-up equity in your residence, that you will be able use to take care of higher interest debt, improve your home, or finance a vacation. With reduced rates, you may also get the chance to build up home equity faster by moving to a shorter term mortgage.
Expenses and Fees
All of these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you were charged for when you got your existing mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might offer to pay points (prepaid interest) to get a lower interest rate. Your savings on the life of the loan could be significant if you have paid up front about three percent of the new loan total. Please talk to a tax professional before acting on hear-say that any paid points may be deducted on your federal income taxes.
Another thing about taxes is that when your interest rate is lowered, of course you'll also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers take into account. Call us at 516-431-2009 to help you do the math.
Most borrowers find that the savings per month quickly outweigh the initial cost of a refinance. We can help you explore what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at 516-431-2009 to get you started.
Curious about refinancing your home? Call us: 516-431-2009.