Weighing the Options of Refinancing

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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate is at least 2 points lower than your existing one? That may have been true a while back, but with the fact that refinancing has been costing less recently, it's a good time to consider a new mortgage loan! A refinance can be worth its cost many times over, considering the advantages that it brings, as well as a reduced interest rate.

Benefits

When you refinance, you could be able to lower the interest rate and mortgage payment , perhaps by a lot. Additionally, you could have the option of pulling out some of the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With reduced rates, you may also be able to build up home equity more quickly by switching to a shorter term loan.

Fees and Expenses

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

Doing the Math

You could offer to pay discount points (prepaid interest) to get a more favorable interest rate. The money you will save on the life of the loan might be substantial if you've paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on hear-say that these paid points may be deducted on your taxes.

Another thing about taxes is that if your interest rate is lowered, it follows that you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is another cost that borrowers take into account. We can help you do the math! Call us at (985) 429-1770.

Most borrowers find that the monthly savings quickly outweigh the up-front expenses of a refinance. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at (985) 429-1770 to get you started.

Want to know more about refinancing your home? Give us a call: (985) 429-1770.

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