When is Refinancing Worth it?

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Some have said that only in the case your new interest is at least 2 points under your current rate, should you refinance your loan. That may have been accurate a while back, but as refinancing has been costing less recently, it is never the wrong time to explore the options of a new mortgage loan! A refinance can be worth its cost many times over, factoring in the advantages that may come, along with a reduced interest rate.

Advantages

You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced loan. You also might be given the option of tapping into the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You may have the option to refinance into a shorter-term mortgage program, giving you the ability to build your home equity faster.

Fees and Expenses

Of course, you'll have to pay for your process of refinancing. With your refinance, you're paying for a lot of the same things you were charged for when you obtained your original mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might look into paying points to get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the new mortgage loan can be significant. You may be told that the points can be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to consult a tax professional before depending on this.

Speaking of taxes, when you bring down your interest rate, it follows that you will also be reducing the interest amount that you can deduct from your taxes. This is another expense that borrowers take into consideration. Call us at 516-431-2009 to help you do the math.

Ultimately, for most the total of up-front costs to refinance are paid back soon in savings each month. We'll help you determine what mortgage program is right for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and how refinancing may effect your taxes. Call us at 516-431-2009 to get you started.

Want to know more about refinancing? Give us a call: 516-431-2009.

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