Weighing the Options of Refinancing

Some have said that only when your new interest will be at least two points lower, should you refinance your loan. That may have been valid years ago, but with refinancing dropping in cost over the last few years, it is a good time to explore the options of a new mortgage! A refinanced loan may be worth its cost many times over, because of the benefits that may come, along with a lower interest rate.

Advantages

You may be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with a refinanced mortgage loan. You also could be given the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage loan, enabling you to build your equity quicker.

Expenses and Fees

As you probably know, you will have some fees and expenses during the process of refinancing. You will pay the same types of fees as you did with your present mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

You could be obligated to pay a penalty for refinancing your present mortgage too soon. It all depends on your present loan contract. Some of the penalties apply only to the first year or two of the mortgage. We will help you with the details: contact us at 305-598-9896.

Do the Math

You might investigate paying points to get a reduced interest rate. If you pay (on average) 3% of the loan amount initially, the savings for the term of the refinanced mortgage can be substantial. You may hear that points can be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please consult your tax professional before making any decisions based on this.

One more expense that borrowers may take into account is that a lower interest rate will lower the interest amount you'll deduct on your taxes. Call us at 305-598-9896 to help you do the math.

Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We'll help you determine which mortgage program is ideal for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and how refinancing might effect your taxes. Call us at 305-598-9896 to get you started.