When is Refinancing Worth it?
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Looking for a mortgage loan? We'd be thrilled to answer your questions about our many mortgage solutions! Give us a call today at (808) 935-0678. Ready to begin? Apply Now.
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Some have said that only in the case your new interest is at least two points under your current rate, should you refinance your loan. That might have been accurate a while back, but since refinancing has been costing less over the last few years, it is never the wrong time to explore the options of a new mortgage! A refinanced mortgage is often worth its cost several times over, because of the advantages that it brings, in addition to a reduced interest rate.
Advantages
You may be able to lower your interest rate (sometimes significantly) and make smaller mortgage payments with your refinanced loan. You may also be able to "cash out" a portion of the built-up equity in your residence, which you may use to consolidate debt, make home improvements, or take a vacation. You may be able to refinance into a shorter-term mortgage, giving you the ability to build your equity quicker.
The Cost
As you probably know, you will have some fees and expenses during the process of refinancing. When you refinance, you're paying for a lot of the same things you paid for when you got your existing mortgage 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 need to pay points (prepaid interest) to attain a better rate of interest. If you pay (on average) 3% of the loan amount at the start, your savings for the life of the refinanced loan can be significant. We recommend that you consult a tax professional before acting on rumors that any paid points may be deducted on your federal income taxes.
Another cost that borrowers may consider is that a reduced rate of interest will lower the interest amount you'll deduct from your federal income taxes. Call us at (808) 935-0678 to help you do the math.
In the end, for most the amount of initial costs to refinance will be made up soon in savings each month. We'll help you determine which mortgage program is ideal for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing may have on your taxes. Call us at (808) 935-0678 to get started.
Curious about refinancing your home? Give us a call at (808) 935-0678.