Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least two points lower, should you refinance your mortgage. Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing has a number of benefits that often make it worth the up-front cost several times over.

Benefits from Refinancing

You could be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced loan. Additionally, you may have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage, enabling you to add to your equity faster.

The Cost

All of these benefits do cost something, though. You'll have the same kinds of expenses and fees as with your present home loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying discount points can get you a better interest rate. Your savings on the life of the mortgage could be significant if you have paid up front about 3% of the new loan total. You may be told that these points can be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to consult a tax professional before making any decisions based on this.

Another thing about taxes is that if your interest rate is lowered, of course you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers take into consideration. We can help you do the math! Call us at (859) 240-1231.

Most people find that the monthly savings quickly outweigh the up-front expenses of refinancing. We'll help you figure out which program is right for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing might have on your taxes. Call us at (859) 240-1231 to get you started.

Curious about refinancing? Give us a call at (859) 240-1231.