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 loan. That might have been valid years ago, but with the fact that refinancing has been costing less recently, it is never the wrong time to consider a new mortgage loan! Refinancing has a number of benefits that often make it worth the up-front expenditure many times over.

Advantages

When you refinance, you could have the ability to lower your interest rate and monthly payment amount, sometimes considerably. Additionally, you could be given the option of pulling out some of your home equity by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage program, giving you the ability to build your home equity quicker.

Fees and Expenses

All these benefits do cost something, though. You will have to pay the same sort of fees as you did with your present mortgage. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Do the Math

You might think about paying points to be given a lower interest rate. The money you'll save on the life of the loan might be substantial if you've paid up front about three percent of the new loan balance. You might hear that points can be deducted on your income taxes, but as tax regulations are ever-changing, we urge you to speak with your tax professional before considering this in your calculations.

Speaking of taxes, if your interest rate is lowered, of course you'll also be lowering the interest amount that you will be able to deduct from your taxes. This is one more cost that some borrowers consider. We can help you do the math! Call us at 719-425-2226.

Most people find that the savings each month balance out the initial expenses of a refinance. We can help you find out what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at 719-425-2226 to get started.

Want to know more about refinancing your home? Give us a call at 719-425-2226.


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