Weighing the Options of Refinancing

It has been said that only if your new interest will be at least 2 points under your current rate, should you refinance your loan. Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be time to take a serious look. A refinanced loan is often worth its cost many times over, factoring in the advantages that come, in addition to a lower interest rate.

Advantages

You might be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with a refinanced mortgage loan. You might also have the ability to "cash out" some of your equity, that you will be able use to take care of higher interest debts, add on to your home, or take a vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to build up your equity quicker.

Expenses and Fees

Of course, you'll have to pay for your process of refinancing. You'll have the same sort of expenses and fees as you did with your existing mortgage. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying discount points can help you get a better interest rate. The amount you'll save over the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on hear-say that these points paid can be deducted on your federal income taxes.

Speaking of taxes, when your interest rate is reduced, naturally you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is another expense that borrowers consider. Call us at (925) 226-7130 or (209) 833-3338 to help you do the math.

Most borrowers find that the savings each month balance out the initial expenses of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your available cash. Call us at (925) 226-7130 or (209) 833-3338 to get started.

Curious about refinancing your home? Call us at (925) 226-7130 or (209) 833-3338.