Weighing the Options of Refinancing

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Some have said that only when your new interest will be at least two points under your current rate, should you refinance your mortgage. That might have been accurate a while back, but with refinancing dropping in cost recently, it's never the wrong time to consider a new loan! A refinanced mortgage may be worth its cost many times over, because of the benefits that it brings, in addition to a lower interest rate.

Advantages of Refinancing

When you refinance, you could be able to reduce your interest rate and monthly payment amount, sometimes significantly. You also may have the option of tapping into the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build your home equity faster by switching to a shorter-term loan.

Expenses and Fees

Of course, you will have to pay for the the refinance process. You'll have the same kinds of fees as you did with your existing mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You could offer to pay discount points (prepaid interest) to gain a better rate of interest. If you pay (on average) three percent of the loan amount initially, the savings for the term of the refinanced loan can be great. Please consult with a tax professional before acting on advice that these points paid can be deducted on your taxes.

Another thing about taxes is that once your interest rate is lowered, it follows that you'll also be lowering the interest amount that you will be able to deduct on your taxes. This is one more expense that some borrowers take into account. We can help you do the math! Call us at 706-860-5514.

Ultimately, for most the total of initial costs to refinance are paid back very quickly in monthly savings. We can help you figure out your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 706-860-5514 to get started.

Curious about refinancing your home? Give us a call: 706-860-5514.

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