Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. Perhaps that was sound advice several years ago, but as refinance costs have been falling recently, it could be time to look into it. A refinance is often worth its cost many times over, considering the advantages that it brings, in addition to a reduced interest rate.

Advantages of Refinancing

You might be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced mortgage loan. You may also have the option to "cash out" a portion of the built-up equity in your residence, that you are able use to consolidate debt, improve your home, or plan a vacation. You may be able to refinance to a shorter-term mortgage, giving you the ability to build up your equity faster.

The Cost

As you probably know, you will have some fees and expenses during the process of refinancing. With your refinance, you are paying for basically the same things you paid for during your original mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might consider paying points to receive a reduced interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the life of the refinanced mortgage loan can be substantial. We recommend that you consult a tax professional before acting on advice that any paid points can be deducted on your federal income taxes.

One more cost that borrowers may consider is that a reduced interest rate will reduce the interest amount you'll be able to deduct from your federal income taxes. We can help you do the math! Call us at 305-800-3863.

Most people find that the monthly savings balance out the initial cost of refinancing. We will help you determine which mortgage program is best for you, considering your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. Call us at 305-800-3863 to get started.

Want to know more about refinancing your home? Give us a call: 305-800-3863.

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