Weighing the Options of Refinancing

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Some have said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. That could have been accurate years ago, but with refinancing dropping in cost in recent years, it's never the wrong time to consider a new mortgage! A refinance may be worth its cost many times over, considering the advantages that it brings, as well as a lower interest rate.

Benefits

When you refinance, you could be able to reduce the interest rate and monthly mortgage payment amount, perhaps significantly. You may also be able to "cash out" a portion of your equity, which you are able use to take care of higher interest debts, improve your home, or take a vacation. With lower rates, you might also get the chance to build your home equity more quickly by changing to a shorter term loan.

Expenses and Fees

All these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you paid for during your existing mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might consider paying points to reduce your interest rate. Your savings over the life of the loan may be substantial if you have paid up front about 3% of the new loan balance. You might hear that these points can be deducted on your income taxes, but because tax regulations are difficult to keep up with, we urge you to consult a tax professional before making any decisions based on this.

Another thing about taxes is that once you bring down your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your federal income taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at (786) 262-6486.

In the end, for most borrowers the total of initial costs to refinance will be paid back soon in monthly savings. We can help you figure out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at (786) 262-6486 to get you started.

Want to know more about refinancing? Give us a call at (786) 262-6486.

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