Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest will be at least two points lower, should you refinance your loan. Perhaps several years ago that was good advice, but since refinance costs have been falling recently, it could be time to look into it. A refinanced loan can be worth its cost several times over, because of the advantages that can come, along with a lower interest rate.
You might be able to lower your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage. You also might have the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build up home equity more quickly by switching to a shorter term loan.
Fees and Expenses
Of course, you will have some fees and expenses during the process of refinancing. You'll pay the same kinds of fees as with your current home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying discount points can result in a lower interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the new mortgage loan can be significant. You might have heard that these points can be tax deductible, but because tax regulations are difficult to keep up with, we urge you to consult a tax professional before considering this in your calculations.
One more cost that borrowers might consider is that a reduced interest rate will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at 352-369-4200.
Most people find that the monthly savings outweigh the up-front cost of refinancing. We will work with you to determine what mortgage loan program is best for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and how refinancing may effect your taxes. Call us at 352-369-4200 to get started.
Curious about refinancing? Give us a call: 352-369-4200.