When is Refinancing Worth it?
Are you looking for a mortgage? We will be glad to help! Call us at (773) 774-9040 Ext 121. Ready to get started? Apply Now.
Have you ever heard the old rule of thumb that says you should only refinance if your new interest rate will be at least two points below your current rate? That might have been good advice years ago, but with the fact that refinancing has been costing less recently, it is a good time to explore the options of a new mortgage loan! Refinancing has various benefits that can make it worth the up-front cost several times over.
Benefits from Refinancing
When you refinance, you might have the ability to lower your interest rate and mortgage payment amount, perhaps by a lot. Additionally, you could be given the option of pulling out some of the equity in your property by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage program, enabling you to add to your home equity faster.
Fees and Expenses
All of these advantages do come with some expense, though. You will be charged the same types of expenses and fees as with your present home loan. Included in your costs can 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) 3% of the loan amount up front, your savings for the term of the new mortgage loan can be substantial. We recommend that you talk to a tax professional before acting on advice that any points paid may be deducted on your taxes.
Another cost that a borrower might consider is that a reduced rate of interest will reduce the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at (773) 774-9040 Ext 121.
Most borrowers find that the monthly savings quickly outweigh the up-front expenses of refinancing. We'll help you figure out which mortgage program is right for you, considering your cash on hand, how likely you are to sell your residence in the near future, and how refinancing can effect your taxes. Call us at (773) 774-9040 Ext 121 to get started.
Curious about refinancing? Call us at (773) 774-9040 Ext 121.