Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least two points below your current rate, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but as refinance costs have been falling recently, it may be time to look into it. A refinance is often worth its cost many times over, because of the advantages that come, as well as a reduced interest rate.

Advantages

You might be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced mortgage loan. 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 plan a special vacation. You might have the option to refinance to a shorter-term mortgage, enabling you to build up your equity faster.

Expenses and Fees

All these advantages do come with some expense, though. When you refinance, you're paying for basically the same things you were charged for when you obtained your existing mortgage loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Do the Math

Paying points can help you attain a better interest rate. The money you'll save on the life of the loan might be significant if you have paid up front about 3% of the new loan balance. You might be told that points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, we urge you to speak with your tax professional before making decisions based on this.

One more cost that borrowers might take into account is that a lower rate of interest will lower the interest amount you will deduct from your taxes. Call us at 972-891-8282 to help you do the math.

In the end, for most people the total of up-front costs to refinance will be made up soon in savings each month. We'll help you determine which mortgage loan program is ideal for you, considering your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing will probably have on your taxes. Call us at 972-891-8282 to get started.

Curious about refinancing? Call us: 972-891-8282.

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