When is Refinancing Worth it?
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Are you looking for a new mortgage loan? We'll be glad to discuss our many mortgage solutions! Give us a call today at (817) 235-3089. Want to get started? Apply Online Now.
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Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least two points under your current one? That may have been valid a while back, but with refinancing dropping in cost over the last few years, it's never the wrong time to think about a new mortgage loan! Refinancing has some benefits that can make it worth the up-front cost many times over.
Advantages
You might be able to lower your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced mortgage. You also might have the option of tapping into the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also get the chance to build your home equity more quickly by switching to a shorter-term loan.
The Cost
As you probably know, you'll have to pay for the the refinance process. When you refinance, you are paying for basically the same things you were charged for during your existing mortgage. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might think about paying points to receive a reduced interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the refinanced loan can be substantial. You might be told that the points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, we urge you to consult your tax professional before making any decisions based on this.
Another thing about taxes is that when you reduce your interest rate, it follows that you will also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers consider. We can help you do the math! Call us at (817) 235-3089.
Most people find that the savings per month quickly balance out the initial cost of a refinance. We will help you find out which program is the best fit for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing could effect your taxes. Call us at (817) 235-3089 to get started.
Want to know more about refinancing? Call us: (817) 235-3089.
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