When is Refinancing Worth it?
Searching for a loan? We'd be thrilled to talk about our many mortgage solutions! Give us a call today at (773) 774-9040 Ext 121. Ready to begin? Apply Now.
It has been said that only if your new interest will be at least 2 points below your current rate, should you refinance your loan. That could have been accurate years ago, but with refinancing dropping in cost recently, it's a good time to think about a new mortgage! Refinancing has various advantages that often make it worth the initial cost a few times over.
You might be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with a refinanced mortgage. You also could be given the option of tapping into your home equity by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also get the chance to build up home equity more quickly by changing to a shorter term mortgage.
Expenses and Fees
As you probably know, you'll have some fees and expenses during your process of refinancing. When you refinance, you're paying for a lot of the same things you were charged for at the time you obtained your current mortgage. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
You might consider paying points to get a reduced interest rate. The amount you'll save on the life of the mortgage loan might be significant if you have paid up front about three percent of the new loan total. You might hear that points may be tax deductible, but since tax regulations are difficult to keep up with, we urge you to speak with your tax professional before depending on this.
Speaking of taxes, when you bring down your interest rate, of course you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers take into account. We can help you do the math! Call us at (773) 774-9040 Ext 121.
Most borrowers find that the savings each month balance out the initial cost of a refinance. We can help you find out your options, 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 money on hand. Call us at (773) 774-9040 Ext 121 to get started.
Want to know more about refinancing? Call us at (773) 774-9040 Ext 121.