When is Refinancing Worth it?
Curious about refinancing your home? Call us at 918-633-9916.
Have you ever heard the old rule of thumb that states you should only consider refinancing if your new interest rate will be at least 2 points under your present one? That might have been true a while back, but as refinancing has been costing less recently, it's never the wrong time to consider a new loan! Refinancing your loan has a number of advantages that often make it worth the up-front cost a few times over.
Advantages of Refinancing
You could be able to lower your interest rate (sometimes substantially) and make smaller mortgage payments with a refinanced loan. You may also be able to "cash out" a portion of the built-up equity in your residence, which you can use to take care of higher interest debt, add on to your home, or plan a vacation. You might be able to refinance into a shorter-term mortgage program, enabling you to build up your home equity faster.
All these advantages do cost something, though. You will be charged the same sort of fees as you did with your current mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
When you refinance your existing mortgage loan too quickly, you may have a penalty to pay. It all depends on your existing mortgage loan agreement. There are penalties that just apply for the first year or two. We'll help you with the details: contact us at 918-633-9916.
Doing the Math
You could need to pay discount points (prepaid interest) to get a better interest rate. Your savings on the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan total. You may hear that these points may be tax deductible, but since tax regulations are ever-changing, we urge you to consult with your tax professional before making decisions based on this.
Another thing about taxes is that when you lower your interest rate, naturally you will also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at 918-633-9916.
Most people find that the monthly savings quickly balance out the initial expenses of a refinance. We will work with you to determine what mortgage loan program is ideal for you, looking at your cash on hand, the likelihood of selling your home in the near future, and how refinancing might effect your taxes. Call us at 918-633-9916 to get you started.
Searching for mortgage advice? We'd be thrilled to discuss your mortgage needs! Give us a call today at 918-633-9916. Ready to begin? Apply Online Now