Is Refinancing Worth the Cost?
 |
 |
 |
Are you looking for a new mortgage loan? We'd be thrilled to discuss your mortgage needs! Give us a call today at (925) 271-7387. Want to get started? Apply Online Now.
|
|
|
|
|
Have you ever heard the old rule of thumb that says you should only refinance if your new interest rate will be at least two points lower than your existing rate? That might have been true years ago, but with refinancing dropping in cost in recent years, it's a good time to think about a new mortgage loan! Refinancing your mortgage has a number of advantages that often make it worth the initial cost many times over.
Benefits
You could be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage. You also may be given the option of pulling out some of your home equity by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to build your home equity faster.
Fees and Expenses
All of these benefits do come with some expense, though. When you refinance, you're paying for a lot of the same things you were charged for during your current mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could need to pay points (prepaid interest) to attain a more favorable rate of interest. Your savings on the life of the mortgage could be substantial if you've paid up front about three percent of the new loan balance. You might have heard that the points may be deducted on your income taxes, but since tax regulations are ever-changing, please speak with a tax professional before considering this in your calculations.
Speaking of taxes, when your interest rate is lowered, it follows that you will also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at (925) 271-7387.
All things considered, for most the amount of initial costs to refinance will be paid back soon in monthly savings. We will work with you to determine which mortgage loan program is the ideal fit for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and how refinancing may effect your taxes. Call us at (925) 271-7387 to get you started.
Curious about refinancing? Call us: (925) 271-7387.
|
