Weighing the Options of Refinancing
Curious about refinancing your home? Call us: 407-496-3555.
Ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate will be at least two points lower than your present rate? That might have been true years ago, but with refinancing dropping in cost in recent years, it is a good time to consider a new loan! A refinanced mortgage loan can be worth its cost several times over, factoring in the advantages that it brings, along with a reduced interest rate.
When you refinance, you could be able to reduce the interest rate and monthly payment amount, sometimes by a lot. You might also have the ability to "cash out" some of the built-up equity in your residence, which you are able use to consolidate debt, add on to your home, or finance a vacation. With lower rates, you might also be able to build up home equity faster by changing to a shorter term mortgage.
Fees and Expenses
All these benefits do cost something, though. With your refinance, you're paying for a lot of the same things you paid for during your existing mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
You may be required to pay a penalty for refinancing your existing loan too soon. It all depends on your present loan contract. However, this type of penalty might apply only to the initial few years of the mortgage loan. We will help you sort through the details: contact us at 407-496-3555.
Doing the Math
You might offer to pay points (prepaid interest) to attain a better interest rate. The amount you will save over the life of the mortgage may be significant if you have paid up front about three percent of the new loan total. You might be told that points may be deducted on your income taxes, but as tax regulations can be ever-changing, we urge you to speak with a tax professional before making decisions based on this.
Another expense that a borrower might take into account is that a reduced interest rate will lower the interest amount you'll deduct from your taxes. Call us at 407-496-3555 to help you do the math.
All things considered, for most the amount of initial costs to refinance are made up soon in monthly savings. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at 407-496-3555 to get you started.
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