Weighing the Options of Refinancing

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Some have said that only if your new interest is at least two points lower, should you refinance your mortgage. That might have been accurate years ago, but since refinancing has been costing less in recent years, it is never the wrong time to explore the options of a new mortgage loan! Refinancing has various advantages that will often make it worth the up-front expenditure many times over.

Benefits

When you refinance, you might have the ability to lower your interest rate and mortgage payment amount, sometimes significantly. You may also be able to "cash out" some of the built-up equity in your residence, which you are able use to consolidate debt, make home improvements, or plan a vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity faster.

The Cost

All of these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you paid for during your current mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to get a reduced interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the new mortgage can be great. You might hear that these points may be tax deductible, but because tax regulations are ever-changing, please consult your tax professional before depending on this.

Speaking of taxes, if you bring down your interest rate, of course you'll also be lowering the interest amount that you can deduct from your federal income taxes. This is another cost that borrowers consider. We can help you do the math! Call us at (773) 774-9040 Ext 121.

Most borrowers find that the monthly savings outweigh the up-front cost of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at (773) 774-9040 Ext 121 to get you started.

Want to know more about refinancing? Give us a call at (773) 774-9040 Ext 121.

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