Is Refinancing Worth the Cost?
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Some have said that only if your new interest will be at least two points lower, should you refinance your loan. That could have been valid a while back, but with refinancing dropping in cost recently, it is a good time to consider a new mortgage loan! A refinance may be worth its cost many times over, factoring in the advantages that it brings, in addition to a reduced interest rate.
Benefits from Refinancing
When you refinance, you might be able to reduce your interest rate and monthly payment , sometimes by a lot. Additionally, you might be given the option of tapping into the equity in your home by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You could have the option to refinance to a shorter-term mortgage program, giving you the ability to build your equity faster.
Fees and Expenses
As you probably expect, you will have some fees and expenses during the the refinance process. With your refinance, you are paying for basically the same things you paid for during your existing mortgage loan. Included in the list might 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. When you pay (on average) three percent of the loan amount up front, the savings for the life of the new mortgage can be great. Please talk to a tax professional before acting on rumors that any points paid may be deducted on your federal income taxes.
One more expense that borrowers might consider is that a lower rate of interest will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 703-288-0777.
Most borrowers find that the monthly savings outweigh the initial expenses of a refinance. We'll help you determine which program is the right fit for you, looking at your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing may have on your taxes. Call us at 703-288-0777 to get started.
Want to know more about refinancing? Give us a call at 703-288-0777.
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