When is Refinancing Worth it?

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Some have said that only when your new interest is at least 2 points lower, should you refinance your loan. That could have been valid years ago, but with refinancing dropping in cost over the last few years, it is a good time to explore the options of a new mortgage loan! A refinance is often worth its cost several times over, factoring in the advantages that it brings, along with a reduced interest rate.

Advantages

When you refinance, you may be able to reduce the interest rate and monthly mortgage payment amount, perhaps significantly. Additionally, you may be given the option of pulling out some of the equity in your house by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build your home equity more quickly by switching to a shorter term loan.

The Cost

As you probably know, you will have to pay for your the refinance process. You will be charged the same types of expenses and fees as you did with your existing home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might investigate paying points to receive a better interest rate. Your savings over the life of the loan may be significant if you have paid up front about three percent of the new loan total. You might be told that points can be tax deductible, but since tax regulations are ever-changing, please consult your tax professional before making any decisions based on this.

Another thing about taxes is that when your interest rate is reduced, it follows that you will also be lowering the interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers consider. We can help you do the math! Call us at (732) 969-9300.

Most people find that the monthly savings balance out the up-front cost of refinancing. We can help you find out your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at (732) 969-9300 to get you started.

Curious about refinancing your home? Call us: (732) 969-9300.

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