Is Refinancing Worth the Cost?
Curious about refinancing? Call us at 970-513-0934.
Ever hear the old rule of thumb that says you should only consider refinancing if the new interest rate is at least 2 points under your present one? That could have been good advice a while back, but with refinancing dropping in cost recently, it's a good time to consider a new mortgage loan! A refinanced mortgage is often worth its cost many times over, factoring in the benefits that it brings, as well as a reduced interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes significantly) and make smaller monthly payments with a refinanced mortgage. You might also be able to "cash out" some of your equity, which you may use to consolidate debt, make home improvements, or plan a vacation. With lower rates, you might also get the chance to build up home equity more quickly by moving to a shorter-term mortgage.
Expenses and Fees
All these advantages do come with some expense, though. When you refinance, you're paying for many of the same things you were charged for during your original mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
When you refinance your current mortgage too soon, there might be a penalty to pay. This depends on the terms of your present mortgage. These penalties might apply only for the first couple of years. We will help you sort through the details: contact us at 970-513-0934.
Doing the Math
You might investigate paying points to be given a lower interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, the savings for the life of the refinanced mortgage loan can be substantial. Please consult a tax professional before acting on advice that these points paid can be deducted on your taxes.
Another thing about taxes is that if you reduce your interest rate, naturally you will also be lowering the paid interest amount that you can deduct on your taxes. This is another cost that some borrowers take into consideration. We can help you do the math! Call us at 970-513-0934.
All things considered, for most the amount of up-front costs to refinance will be made up soon in monthly savings. We'll work with you to find out what mortgage program is right for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at 970-513-0934 to get started.
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