Is Refinancing Worth the Cost?
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Shopping for a mortgage? We'd be thrilled to discuss your mortgage needs! Call us at (301)-938-1655. Ready to get started? Apply Here.
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Have you ever heard the pearl of wisdom that says you should only consider refinancing if your new interest rate will be at least two points below your present rate? That could have been true a while back, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to think about a new loan! A refinance can be worth its cost several times over, because of the advantages that may come, in addition to a reduced interest rate.
Advantages
When you refinance, you may have the ability to lower your interest rate and monthly mortgage payment , sometimes by a lot. You may also have the ability to "cash out" some of the built-up equity in your home, that you may use to take care of higher interest debt, make home improvements, or finance a vacation. With lower rates, you might also get the chance to build up home equity faster by changing to a shorter term mortgage loan.
Expenses and Fees
Of course, you'll have some fees and expenses during the the refinance process. With your refinance, you are paying for basically the same things you paid for when you got your existing mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can help you attain a lower interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the new loan can be substantial. You may have heard that points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, we urge you to consult with a tax professional before considering this in your calculations.
Another thing about taxes is that once your interest rate is lowered, it follows that you will also be lowering the paid interest amount that you'll be able to deduct from your taxes. This is another expense that borrowers take into account. We can help you do the math! Call us at (301)-938-1655.
Most people find that the savings each month quickly balance out the initial expenses of a refinance. We can help you figure out your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (301)-938-1655 to get started.
Want to know more about refinancing? Call us at (301)-938-1655.
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