Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest will be at least 2 points below your current rate, should you refinance your mortgage. Maybe several years ago that was sage advice, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing your mortgage has a variety of benefits that will often make it worth the up-front expenditure a few times over.
Benefits from Refinancing
When you refinance, you may be able to lower the interest rate and monthly mortgage payment amount, sometimes significantly. You may also have the ability to "cash out" some of your home equity, that you can use to take care of higher interest debt, add on to your home, or take a vacation. With reduced rates, you may also be able to build up home equity faster by moving to a shorter-term mortgage loan.
Fees and Expenses
As you probably expect, you will have some fees and expenses during your process of refinancing. You'll have to pay the same kinds of fees as you did with your existing home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might think about paying points to be given a better interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the life of the new mortgage loan can be great. You might have heard that points may be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to consult with a tax professional before depending on this.
Another cost that borrowers might consider is that a lower rate of interest will reduce the interest amount you'll deduct on your taxes. Fortune Financial Corporation can help you do the math.
Most borrowers find that the savings per month quickly outweigh the up-front expenses of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 731-925-9959 to get started.
Curious about refinancing your home? Give us a call at 731-925-9959.