When is Refinancing Worth it?
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Are you looking for a mortgage loan? We'd be thrilled to discuss your mortgage needs! Call us at (773) 774-9040 Ext 121. Ready to begin? Apply Online Now.
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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 lower than your current one? That may have been true years ago, but since refinancing has been costing less recently, it's never the wrong time to consider a new mortgage! A refinanced mortgage loan can be worth its cost many times over, because of the advantages that may come, in addition to a lower interest rate.
Advantages
When you refinance, you may be able to lower your interest rate and monthly mortgage payment amount, perhaps considerably. You might also have the ability to "cash out" a portion of your equity, which you will be able use to consolidate debt, make home improvements, or take a vacation. With lower rates, you might also be able to build up home equity faster by changing to a shorter term mortgage loan.
The Cost
Of course, you will have to pay for the the refinance process. You will pay the same types of fees as with your existing home loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
You could need to pay discount points (prepaid interest) to get a lower rate of interest. The money you'll save over the life of the mortgage might be significant if you have paid up front about 3% of the new loan total. Please consult a tax professional before acting on hear-say that the points paid may be deducted on your taxes.
Speaking of taxes, when your interest rate is reduced, of course you'll also be lowering the interest amount that you will be able to deduct on 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 savings per month quickly outweigh the initial expenses of a refinance. We'll work with you to determine what mortgage program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the near future, and what effect refinancing could have on your taxes. Call us at (773) 774-9040 Ext 121 to get you started.
Want to know more about refinancing your home? Call us at (773) 774-9040 Ext 121.