When To Refinance

Some have said that only in the case your new interest will be at least 2 points below your current rate, should you refinance your mortgage. That could have been true a while back, but with the fact that refinancing has been costing less recently, it’s a good time to explore the options of a new loan! A refinanced mortgage loan is often worth its cost many times over, factoring in the benefits that may come, along with a reduced interest rate.

Advantages

You may be able to lower your interest rate (sometimes by a lot) and have smaller monthly payments with a refinanced mortgage. Additionally, you might have the option of tapping into your home equity by “cashing out” a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to add to your equity faster.

The Cost

Of course, you will have some fees and expenses during your process of refinancing. You will be charged the same sort of expenses and fees as you did with your existing home loan. Included in your costs may be an appraisal, underwriting fees, lender’s title insurance, settlement costs, and other fees.

Do the Math

You could offer to pay discount points (prepaid interest) to get a more favorable rate of interest. The amount you will save over the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan balance. You might have heard that the points can be deducted on your income taxes, but as tax regulations are ever-changing, we urge you to consult your tax professional before making decisions based on this.

An additional expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you’ll be able to deduct on your federal income taxes. We can help you do the math! Call us at 760-930-0325.

Ultimately, for most people the total of initial costs to refinance are made up soon in monthly savings. We’ll work with you to find out what program is perfect for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing might have on your taxes. Call us at 760-930-0325 to get you started.

Curious about refinancing? Call us: 760-930-0325.

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