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Weighing the Options of Refinancing

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It has been said that only when your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it may be a good time to look into it. Refinancing your mortgage has a number of benefits that will often make it worth the up-front cost a few times over.

Benefits

When you refinance, you could be able to reduce your interest rate and monthly mortgage payment , perhaps considerably. You could also have the option to "cash out" some of your equity, that you may use to take care of higher interest debt, improve your home, or plan a vacation. With reduced rates, you may also get the chance to build up home equity faster by changing to a shorter-term loan.

Expenses and Fees

Of course, you will have to pay for the process of refinancing. When you refinance, you are paying for basically the same things you paid for when you obtained your existing mortgage. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Doing the Math

You might need to pay discount points (prepaid interest) to get a better interest rate. Your savings over the life of the loan could be significant if you have paid up front about three percent of the new loan balance. You may be told that points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please speak with a tax professional before depending on this.

Another thing about taxes is that if your interest rate is lowered, naturally you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is one more cost that borrowers take into consideration. We can help you do the math! Call us at 516-431-2009.

Most people find that the monthly savings quickly outweigh the initial expenses of refinancing. We'll help you find out which mortgage loan program is best for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and how refinancing might effect your taxes. Call us at 516-431-2009 to get started.

Want to know more about refinancing? Call us at 516-431-2009.

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