Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least two points lower than your present rate? That might have been accurate a while back, but as refinancing has been costing less recently, it's a good time to consider a new mortgage loan! A refinance can be worth its cost several times over, because of the benefits that it brings, in addition to a lower interest rate.
You could be able to bring down your interest rate (sometimes significantly) and make smaller mortgage payments with your refinanced mortgage. You also may have the option of pulling out some of the equity in your home by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You might have the option to refinance to a shorter-term mortgage, enabling you to add to your equity quicker.
Of course, you'll have some fees and expenses during the the refinance process. When you refinance, you are paying for most of the same things you paid for during your original mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can help you attain a lower interest rate. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the new loan can be great. You may hear that these points can be deducted on your income taxes, but since tax regulations can be ever-changing, we urge you to consult your tax professional before making any decisions based on this.
Another expense that a borrower might take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 503-657-3311.
Most people find that the savings per month quickly balance out the up-front cost of a refinance. We will work with you to determine what mortgage loan program is perfect for you, looking at your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing will probably have on your taxes. Call us at 503-657-3311 to get you started.
Curious about refinancing? Give us a call: 503-657-3311.