Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. That could have been accurate a while back, but with refinancing dropping in cost recently, it is never the wrong time to consider a new mortgage loan! Refinancing your mortgage has a variety of benefits that often make it worth the up-front expenditure several times over.
You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage loan. You may also have the ability to "cash out" a portion of the built-up equity in your home, which you are able use to take care of higher interest debt, add on to your home, or plan a vacation. With lower rates, you might also be able to build up home equity more quickly by changing to a shorter term loan.
All these advantages do come with some expense, though. With your refinance, you are paying for many of the same things you paid for during your current mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
You could offer to pay discount points (prepaid interest) to gain a lower rate of interest. The amount you will save over the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan total. We recommend that you talk to a tax professional before acting on advice that the points paid can be deducted on your taxes.
Speaking of taxes, if your interest rate is lowered, it follows that you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers consider. Call us at (973) 601-2122 to help you do the math.
Most borrowers find that the monthly savings outweigh the initial expenses of a refinance. We will help you determine what mortgage loan program is the ideal fit for you, considering your cash on hand, how likely you are to sell your home in the next few years, and how refinancing will effect your taxes. Call us at (973) 601-2122 to get you started.
Curious about refinancing your home? Give us a call at (973) 601-2122.