Is Refinancing Worth the Cost?
Curious about refinancing your home? Give us a call: 303-477-3889.
Have you ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least 2 points under your present rate? That might have been accurate a while back, but since refinancing has been costing less in recent years, it is a good time to consider a new mortgage! A refinanced mortgage loan may be worth its cost many times over, factoring in the benefits that may come, along with a lower interest rate.
When you refinance, you might have the ability to reduce your interest rate and monthly payment , sometimes considerably. You might also be able to "cash out" some of the built-up equity in your home, that you can use to consolidate debt, make home improvements, or take a vacation. With lower rates, you might also be able to build your home equity more quickly by changing to a shorter-term mortgage.
Expenses and Fees
All of these benefits do come with some expense, though. You will be charged the same sort of fees as you did with your current home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
You may be required to pay a penalty for refinancing your present mortgage too soon. It all depends on your existing loan contract. There are penalties that just apply to the first year or two of the mortgage. We will help you figure it out.
Doing the Math
You might think about paying points to get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount initially, the savings for the life of the refinanced mortgage can be substantial. We recommend that you consult with a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
Speaking of taxes, when you bring down your interest rate, of course you'll also be lowering the interest amount that you'll be able to deduct from your taxes. This is another expense that some borrowers take into account. We can help you do the math!
Ultimately, for most the total of up-front costs to refinance are made up very quickly in savings each month. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 303-477-3889 to get you started.
Are you looking for a new mortgage loan? We'll be glad to discuss our mortgage offerings! Give us a call at 303-477-3889. Ready to get started? Apply Here