Weighing the Options of Refinancing
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It has been said that only when your new interest will be at least two points lower, should you refinance your loan. That could have been valid a while back, but as refinancing has been costing less in recent years, it is a good time to explore the options of a new mortgage loan! A refinanced mortgage can be worth its cost many times over, considering the advantages that it brings, along with a reduced interest rate.
Advantages of Refinancing
When you refinance, you might have the ability to lower the interest rate and monthly payment amount, perhaps by a lot. You may also have the option to "cash out" a portion of the built-up equity in your residence, that you can use to take care of higher interest debt, improve your home, or plan a vacation. With lower interest rates, you might also be able to build up home equity faster by changing to a shorter term mortgage loan.
Fees and Expenses
All these advantages do cost something, though. When you refinance, you are paying for most of the same things you paid for at the time you obtained your existing mortgage. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might consider paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the new mortgage can be substantial. Please consult a tax professional before acting on rumors that any points paid can be deducted on your taxes.
Another cost that borrowers may consider is that a lower interest rate will lower the interest amount you'll be able to 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 initial expenses of refinancing. We'll help you figure out what program is ideal for you, considering your cash on hand, how likely you are to sell your house in the next few years, and the effect refinancing might have on your taxes. Call us at (808) 935-0678 to get started.
Curious about refinancing your home? Call us at (808) 935-0678.
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