Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points below your current rate, should you refinance your loan. That might have been good advice years ago, but since refinancing has been costing less over the last few years, it's never the wrong time to explore the options of a new mortgage loan! Refinancing has a variety of benefits that will often make it worth the up-front cost several times over.

Advantages

When you refinance, you may be able to lower your interest rate and monthly mortgage payment , perhaps by a lot. Additionally, you could be given the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build your home equity more quickly by moving to a shorter-term loan.

Fees and Expenses

All of these benefits do cost something, though. You will have the same kinds of fees as you did with your present mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might investigate paying points to reduce your interest rate. Your savings over the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan total. You may have heard that these points can be deducted on your income taxes, but since tax regulations are ever-changing, please consult a tax professional before considering this in your calculations.

Another expense that borrowers may take into account is that a reduced rate of interest will lower the interest amount you'll deduct from your federal income taxes. Call us at 516-431-2009 to help you do the math.

Most people find that the savings each month balance out the initial cost of refinancing. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at 516-431-2009 to get you started.

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

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