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 under your present one? Maybe that was sound advice a number of years ago, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing your mortgage has various advantages that can make it worth the initial cost a few times over.
You might be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with a refinanced mortgage loan. Additionally, you might have the option of pulling out some of the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also be able to build your home equity more quickly by switching to a shorter term mortgage.
Expenses and Fees
As you probably expect, you will have to pay for the process of refinancing. You'll be charged the same sort of expenses and fees as with your present mortgage loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can help you attain a better interest rate. The money you'll save over the life of the mortgage may be significant if you've paid up front about three percent of the new loan total. Please talk to a tax professional before acting on hear-say that any paid points can be deducted on your federal income taxes.
An additional expense that a borrower might consider is that a reduced rate of interest will reduce the interest amount you'll deduct on your taxes. Call us at (732) 969-9300 to help you do the math.
Ultimately, for most the total of initial costs to refinance will be paid back very quickly in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at (732) 969-9300 to get started.
Want to know more about refinancing? Call us: (732) 969-9300.