When is Refinancing Worth it?
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Shopping for a mortgage loan? We will be glad to assist you! Give us a call today at (808) 935-0678. Ready to begin? Apply Now.
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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least two points below your existing rate? Perhaps that was sound advice several years ago, but as refinance costs have been falling recently, it could be a good time to look into it. Refinancing has a variety of advantages that will often make it worth the initial cost several times over.
Advantages of Refinancing
When you refinance, you could have the ability to reduce the interest rate and monthly payment , sometimes considerably. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage loan, enabling you to build up your home equity faster.
Fees and Expenses
All these benefits do cost something, though. With your refinance, you're paying for basically the same things you were charged for during your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might consider paying points to reduce your interest rate. The amount you'll save on the life of the loan could be substantial if you have paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on rumors that these points paid can be deducted on your taxes.
Another thing about taxes is that if you bring down your interest rate, naturally you will also be reducing the paid interest amount that you will be able to deduct on your federal income taxes. This is one more expense that borrowers take into consideration. Call us at (808) 935-0678 to help you do the math.
Most borrowers find that the savings per month quickly outweigh the up-front cost of a refinance. We will help you determine which loan program is the best fit for you, considering your cash on hand, the likelihood of selling your house in the near future, and how refinancing might effect your taxes. Call us at (808) 935-0678 to get you started.
Want to know more about refinancing? Call us at (808) 935-0678.