When is Refinancing Worth it?
Want to know more about refinancing? Give us a call at 954-400-0488.
It has been said that only when your new interest will be at least two points below your current rate, should you refinance your mortgage. Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing your mortgage has a number of advantages that can make it worth the initial cost a few times over.
When you refinance, you may be able to lower the interest rate and mortgage payment , perhaps by a lot. You also may be given the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also get the chance to build your home equity more quickly by moving to a shorter term mortgage loan.
As you probably know, you will have to pay for the process of refinancing. When you refinance, you're paying for basically the same things you paid for at the time you obtained your current mortgage loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
When you refinance your present mortgage loan too quickly, there might be a penalty to pay. It all depends on your present mortgage contract. These penalties sometimes apply only to the first couple of years. We will help you with the details: contact us at 954-400-0488.
Do the Math
You could offer to pay discount points (prepaid interest) to gain a more favorable rate of interest. The money you will save on the life of the mortgage could be substantial if you have paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on advice that the paid points may be deducted on your taxes.
Another expense that borrowers may take into account is that a lower interest rate will lower the interest amount you will deduct from your taxes. Call us at 954-400-0488 to help you do the math.
All things considered, for most people the total of initial costs to refinance will be made up soon in monthly savings. We'll help you figure out which mortgage loan program is the best fit for you, considering your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing may have on your taxes. Call us at 954-400-0488 to get you started.
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