When is Refinancing Worth it?
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In the market for a mortgage? We'll be glad to answer your questions about your mortgage needs! Give us a call at (773) 774-9040 Ext 121. Ready to begin? Apply Now.
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Some have said that only when your new interest will be at least 2 points under your current rate, should you refinance your mortgage. That might have been true a while back, but with refinancing dropping in cost recently, it is a good time to think about a new mortgage! Refinancing your loan has various benefits that often make it worth the up-front expenditure many times over.
Advantages
When you refinance, you might be able to reduce your interest rate and monthly payment , sometimes significantly. You may also have the option to "cash out" a portion of the built-up equity in your home, that you will be able use to take care of higher interest debt, improve your home, or plan a vacation. With reduced rates, you may also get the chance to build your home equity faster by changing to a shorter-term loan.
The Cost
As you probably expect, you will have some fees and expenses during the process of refinancing. You will have the same kinds of expenses and fees as with your existing mortgage. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can result in a better interest rate. Your savings over the life of the mortgage loan may be substantial if you have paid up front about 3% of the new loan balance. You may hear that the points can be deducted on your income taxes, but because tax regulations are difficult to keep up with, we urge you to speak with your tax professional before depending on this.
Speaking of taxes, if your interest rate is reduced, it follows that you will also be reducing the interest amount that you can deduct from your taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at (773) 774-9040 Ext 121.
Ultimately, for most people the amount of initial costs to refinance are made up very quickly in savings each month. We will work with you to find out what mortgage program is the ideal fit for you, considering your cash on hand, how likely you are to sell your house in the next few years, and how refinancing may effect your taxes. Call us at (773) 774-9040 Ext 121 to get you started.
Want to know more about refinancing? Call us: (773) 774-9040 Ext 121.