When is Refinancing Worth it?
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Shopping for a mortgage? We will be glad to help! Call us at (303) 524-9907. Ready to begin? Apply Here.
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Ever hear the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least two points below your existing rate? That might have been sound advice a while back, but with refinancing dropping in cost over the last few years, it is never the wrong time to consider a new loan! Refinancing your mortgage has a variety of benefits that will often make it worth the up-front cost many times over.
Benefits from Refinancing
When you refinance, you could be able to lower the interest rate and monthly mortgage payment , sometimes significantly. You could also be able to "cash out" some of the built-up equity in your residence, that you can use to consolidate debt, improve your home, or finance a vacation. With reduced interest rates, you may also be able to build your home equity more quickly by moving to a shorter term mortgage loan.
Expenses and Fees
Of course, you will have to pay for your process of refinancing. When you refinance, you are paying for basically the same things you were charged for when you got your original mortgage. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
Paying discount points can help you attain a better interest rate. When you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the new loan can be significant. You may be told that the points may be tax deductible, but because tax regulations can be ever-changing, please speak with your tax professional before considering this in your calculations.
Speaking of taxes, once you reduce your interest rate, of course you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is another expense that borrowers consider. We can help you do the math! Call us at (303) 524-9907.
Most people find that the monthly savings quickly outweigh the initial expenses of refinancing. We'll work with you to determine which program is best for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing may have on your taxes. Call us at (303) 524-9907 to get you started.
Want to know more about refinancing your home? Call us: (303) 524-9907.
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