Weighing the Options of Refinancing

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Ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least 2 points below your present one? That may have been true a while back, but as refinancing has been costing less recently, it's a good time to explore the options of a new mortgage! Refinancing has various advantages that often make it worth the up-front expenditure many times over.

Benefits

You might be able to lower your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage loan. You also could have the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You may be able to refinance into a shorter-term mortgage loan, enabling you to build up your home equity quicker.

Fees and Expenses

All of these advantages do come with some expense, though. You will be charged the same sort of fees as with your current mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying points can result in a lower interest rate. If you pay (on average) 3% of the loan amount initially, the savings for the term of the new mortgage can be significant. Please consult with a tax professional before acting on rumors that the paid points may be deducted on your taxes.

Speaking of taxes, if your interest rate is lowered, of course you'll also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is another cost that some borrowers take into consideration. Call us at 503-657-3311 to help you do the math.

Most borrowers find that the savings per month quickly outweigh the up-front expenses of a refinance. We'll work with you to figure out which mortgage program is perfect for you, looking at your cash on hand, the likelihood of selling your home in the near future, and how refinancing can effect your taxes. Call us at 503-657-3311 to get started.

Curious about refinancing your home? Give us a call: 503-657-3311.