Is Refinancing Worth the Cost?
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Some have said that only in the case your new interest will be at least two points lower, should you refinance your mortgage. That might have been valid years ago, but as refinancing has been costing less recently, it's a good time to consider a new loan! A refinance can be worth its cost many times over, because of the advantages that may come, as well as a reduced interest rate.
You might be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced mortgage loan. You may also have the option to "cash out" a portion of your home equity, which you may use to consolidate debt, add on to your home, or finance a vacation. With reduced interest rates, you may also get the chance to build your home equity more quickly by switching to a shorter-term mortgage loan.
All of these advantages do come with some expense, though. When you refinance, you're paying for many of the same things you paid for at the time you got your existing mortgage loan. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying points can get you a better interest rate. Your savings over the life of the mortgage loan may be substantial if you've paid up front about 3% of the new loan total. Please talk to a tax professional before acting on advice that the points paid may be deducted on your federal income taxes.
Another cost that borrowers may consider is that a reduced interest rate will lower the interest amount you will deduct on your taxes. Call us at 405-513-7700 to help you do the math.
Most people find that the monthly savings quickly outweigh the initial cost of a refinance. We'll help you determine what loan program is best for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing will have on your taxes. Call us at 405-513-7700 to get you started.
Want to know more about refinancing? Give us a call: 405-513-7700.