When is Refinancing Worth it?
 |
 |
 |
Are you looking for a mortgage loan? We'll be glad to talk about our many mortgage solutions! Give us a call at (207) 571-8034. Ready to get started? Apply Here.
|
|
|
|
|
Ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate will be at least two points under your existing rate? That might have been valid years ago, but with the fact that refinancing has been costing less recently, it is never the wrong time to explore the options of a new mortgage loan! Refinancing your mortgage loan has a number of advantages that will often make it worth the up-front cost several times over.
Advantages
When you refinance, you could be able to lower the interest rate and monthly mortgage payment amount, sometimes significantly. You may also have the option to "cash out" some of the built-up equity in your home, that you can use to take care of higher interest debt, improve your home, or plan a vacation. With lower interest rates, you might also get the chance to build up home equity faster by changing to a shorter term mortgage.
The Cost
Of course, you will have to pay for your process of refinancing. You'll be charged the same types of expenses and fees as with your existing home loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
Paying points can get you a lower interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the life of the new loan can be substantial. Please consult with a tax professional before acting on advice that any points paid may be deducted on your federal income taxes.
An additional expense that borrowers might consider is that a reduced rate of interest will reduce the interest amount you will be able to deduct from your federal income taxes. Call us at (207) 571-8034 to help you do the math.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of refinancing. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (207) 571-8034 to get you started.
Want to know more about refinancing your home? Call us: (207) 571-8034.