Is Refinancing Worth the Cost?
Want to know more about refinancing your home? Give us a call: 903-482-1123.
Ever heard the pearl of wisdom that says you should only consider refinancing if your new interest rate is at least 2 points lower than your present rate? Maybe several years ago that was wise advice, but since refinance costs have been getting lower, it could be time to look into it. A refinance can be worth its cost many times over, considering the advantages that it brings, as well as a reduced interest rate.
Benefits from Refinancing
When you refinance, you may be able to reduce your interest rate and monthly payment amount, perhaps significantly. You also might have the option of pulling out some of the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage loan, giving you the ability to build up your home equity quicker.
Expenses and Fees
All these advantages do cost something, though. With your refinance, you are paying for a lot of the same things you were charged for during your existing mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
If you refinance your present mortgage loan too soon, you might have a penalty . It all depends on your present mortgage agreement. However, this sort of penalty may apply just to the first couple of years of your loan. We will help you with the details: contact us at 903-482-1123.
Do the Math
You might need to pay points (prepaid interest) to get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount up front, your savings for the term of the new mortgage can be significant. You may be told that the points may be tax deductible, but because tax regulations can be ever-changing, we urge you to speak with your tax professional before depending on this.
Another thing about taxes is that if your interest rate is reduced, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers take into account. Call us at 903-482-1123 to help you do the math.
In the end, for most the amount of initial costs to refinance will be made up very quickly in savings each month. We can help you find out what your options are, considering the effect a refinance could 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 903-482-1123 to get you started.
Looking for mortgage advice? We will be glad to assist you! Give us a call today at 903-482-1123. Want to get started? Apply Now