Weighing the Options of Refinancing
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Ever heard the old rule of thumb that states you should only consider refinancing if your new interest rate will be at least 2 points lower than your present rate? Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it may be a good time to take a serious look. A refinanced loan can be worth its cost several times over, considering the benefits that it brings, in addition to a reduced interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with a refinanced mortgage. You could also have the option to "cash out" a portion of your equity, that you may use to consolidate debts, make home improvements, or finance a vacation. You might have the option to refinance to a shorter-term mortgage loan, enabling you to build up your equity faster.
Expenses and Fees
Of course, you will have to pay for your process of refinancing. You'll have to pay the same sort of fees as you did with your current home loan. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
You could offer to pay discount points (prepaid interest) to attain a lower rate of interest. The money you'll save over the life of the mortgage loan could be substantial if you have paid up front about three percent of the new loan total. We recommend that you consult with a tax professional before acting on rumors that the paid points may be deducted on your federal income taxes.
An additional cost that a borrower might take into account is that a lower interest rate will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at (207) 571-8034.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We'll help you find out what program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing could have on your taxes. Call us at (207) 571-8034 to get started.
Curious about refinancing your home? Call us: (207) 571-8034.