Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least two points below your existing rate? That could have been valid years ago, but as refinancing has been costing less over the last few years, it is never the wrong time to consider a new mortgage loan! A refinance may be worth its cost several times over, because of the advantages that it brings, as well as a lower interest rate.
Advantages
You might be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage loan. You might also have the ability to "cash out" some of the built-up equity in your home, that you can use to consolidate debt, add on to your home, or finance a vacation. With reduced interest rates, you might also be able to build up home equity faster by changing to a shorter term loan.
Expenses and Fees
All these advantages do cost something, though. When you refinance, you are paying for many of the same things you were charged for during your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to reduce your interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the life of the new mortgage loan can be significant. Please consult a tax professional before acting on hear-say that the points paid may be deducted on your taxes.
Another thing about taxes is that once you reduce your interest rate, naturally you'll also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers consider. We can help you do the math! Call us at (207) 571-8034.
Most people find that the monthly savings outweigh the up-front expenses of a refinance. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your cash on hand. Call us at (207) 571-8034 to get you started.
Curious about refinancing? Call us at (207) 571-8034.