Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least two points under your current one? That may have been good advice a while back, but since refinancing has been costing less in recent years, it's never the wrong time to consider a new loan! Refinancing your mortgage has a number of benefits that will often make it worth the initial expenditure several times over.
Benefits from Refinancing
When you refinance, you may have the ability to lower your interest rate and monthly mortgage payment amount, perhaps by a lot. You also could be given the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage program, giving you the ability to build up your equity faster.
Of course, you will have some fees and expenses during your process of refinancing. With your refinance, you're paying for most of the same things you paid for during your original mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might offer to pay discount points (prepaid interest) to attain a lower interest rate. If you pay (on average) 3% of the mortgage loan amount up front, the savings for the term of the refinanced mortgage loan can be great. We recommend that you consult with a tax professional before acting on hear-say that these points paid can be deducted on your federal income taxes.
Another expense that borrowers might consider is that a reduced rate of interest will lower the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (786) 262-6486.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at (786) 262-6486 to get started.
Want to know more about refinancing your home? Give us a call: (786) 262-6486.