Is Refinancing Worth the Cost?
Are you looking for a new mortgage? We can assist you! Give us a call at 916-989-6222. Want to get started? Apply Here
Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least 2 points lower than your existing rate? That could have been good advice years ago, but with refinancing dropping in cost recently, it is never the wrong time to explore the options of a new mortgage! Refinancing your loan has a number of benefits that will often make it worth the up-front cost many times over.
You could be able to lower your interest rate (sometimes significantly) and make smaller monthly payments with a refinanced mortgage loan. You might also have the option to "cash out" some of your home equity, which you will be able use to take care of higher interest debt, make home improvements, or take a vacation. With lower rates, you might also be able to build your home equity faster by changing to a shorter-term loan.
Expenses and Fees
As you probably expect, you will have some fees and expenses during the process of refinancing. When you refinance, you're paying for basically the same things you were charged for during your existing mortgage loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay discount points (prepaid interest) to attain a better interest rate. The money you'll save on the life of the mortgage could be significant if you have paid up front about 3% of the new loan total. You may be told that the points may be deducted on your income taxes, but because tax regulations are ever-changing, please consult with your tax professional before making decisions based on this.
Another thing about taxes is that if you reduce your interest rate, of course you will also be reducing the paid interest amount that you may deduct from your taxes. This is another cost that some borrowers consider. We can help you do the math! Call us at 916-989-6222.
Most borrowers find that the monthly savings outweigh the initial expenses of a refinance. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 916-989-6222 to get started.
Curious about refinancing your home? Give us a call: 916-989-6222.