Weighing the Options of Refinancing

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Ever heard the old rule of thumb that says you should only refinance if your new interest rate is at least two points under your present one? That may have been valid a while back, but since refinancing has been costing less recently, it's never the wrong time to think about a new mortgage! Refinancing your mortgage has a number of benefits that will often make it worth the up-front expenditure many times over.

Benefits from Refinancing

When you refinance, you might be able to lower the interest rate and monthly mortgage payment , sometimes significantly. You could also have the option to "cash out" some of your equity, that you will be able use to consolidate debt, make home improvements, or take a vacation. You could have the option to refinance into a shorter-term mortgage, giving you the ability to build your home equity faster.

Expenses and Fees

All of these benefits do cost something, though. With your refinance, you're paying for basically the same things you were charged for during your current mortgage loan. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying discount points can get you a lower interest rate. Your savings on the life of the loan might be significant if you have paid up front about three percent of the new loan total. You might hear that the points can be deducted on your income taxes, but since tax regulations are difficult to keep up with, we urge you to consult with a tax professional before making any decisions based on this.

One more expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at (207) 571-8034.

Most people find that the monthly savings quickly balance out the up-front expenses of a refinance. We'll work with you to determine what program is right for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing might have on your taxes. Call us at (207) 571-8034 to get you started.

Curious about refinancing? Call us: (207) 571-8034.