Weighing the Options of Refinancing
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It has been said that only when your new interest will be at least 2 points under your current rate, should you refinance your loan. Maybe that was good advice a number of years ago, but since refinance costs have been getting lower, it could be time to take a serious look. A refinanced mortgage loan is often worth its cost many times over, factoring in the benefits that it brings, as well as a lower interest rate.
When you refinance, you may have the ability to lower the interest rate and monthly mortgage payment , sometimes considerably. Additionally, you could be given the option of pulling out some of your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build your home equity more quickly by switching to a shorter-term loan.
As you probably expect, you will have some fees and expenses during the the refinance process. You will pay the same kinds of fees as with your present home loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
You might offer to pay discount points (prepaid interest) to attain a more favorable rate of interest. The money you will save on the life of the mortgage loan could be significant if you have paid up front about 3% of the new loan balance. Please consult a tax professional before acting on hear-say that any points paid may be deducted on your federal income taxes.
One more cost that borrowers might take into account is that a lower interest rate will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at (786) 262-6486.
In the end, for most people the total of initial costs to refinance are paid back very quickly in savings each month. We'll work with you to determine what program is the ideal fit for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and the effect refinancing will probably have on your taxes. Call us at (786) 262-6486 to get you started.
Want to know more about refinancing your home? Call us at (786) 262-6486.