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Weighing the Options of Refinancing

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It has been said that only when your new interest is at least 2 points lower, should you refinance your loan. Maybe several years ago that was sage advice, but as refinance costs have been getting lower, it may be time to look into it. A refinanced mortgage is often worth its cost many times over, because of the advantages that it brings, in addition to a lower interest rate.

Benefits

When you refinance, you might have the ability to reduce the interest rate and mortgage payment , sometimes significantly. You may also have the option to "cash out" some of your home equity, which you are able use to consolidate debt, improve your home, or take a vacation. You could be able to refinance into a shorter-term mortgage, enabling you to add to your equity quicker.

Expenses and Fees

Of course, you will have some fees and expenses during the the refinance process. You'll have the same kinds of expenses and fees as with your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might consider paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount up front, the savings for the life of the refinanced loan can be significant. You might be told that points may be tax deductible, but since tax regulations are ever-changing, we urge you to consult your tax professional before depending on this.

Speaking of taxes, when your interest rate is reduced, of course you'll also be reducing the paid interest amount that you may deduct on your taxes. This is another expense that borrowers take into consideration. We can help you do the math! Call us at 610-572-3635.

Most borrowers find that the savings per month quickly balance out the initial expenses of refinancing. We'll help you determine which mortgage program is perfect for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing will probably have on your taxes. Call us at 610-572-3635 to get you started.

Want to know more about refinancing? Call us at 610-572-3635.


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