Is Refinancing Worth the Cost?
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Some have said that only if your new interest will be at least two points under your current rate, should you refinance your loan. Perhaps several years ago that was sage advice, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage loan is often worth its cost several times over, considering the advantages that may come, as well as a reduced interest rate.
When you refinance, you might have the ability to lower your interest rate and mortgage payment , sometimes considerably. You could also be able to "cash out" a portion of your equity, that you will be able use to take care of higher interest debts, add on to your home, or take a vacation. With reduced rates, you might also get the chance to build your home equity faster by moving to a shorter-term loan.
Expenses and Fees
All of these advantages do cost something, though. With your refinance, you are paying for basically the same things you paid for during your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might investigate paying points to receive a reduced interest rate. Your savings on the life of the mortgage loan may be substantial if you have paid up front about 3% of the new loan total. We recommend that you consult with a tax professional before acting on hear-say that these paid points may be deducted on your taxes.
Another expense that borrowers may take into account is that a reduced interest rate will reduce the interest amount you'll deduct on your taxes. Call us at (808) 935-0678 to help you do the math.
Most borrowers find that the savings each month quickly balance out the up-front cost of a refinance. We can help you figure out your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at (808) 935-0678 to get started.
Want to know more about refinancing? Call us: (808) 935-0678.
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