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 is at least 2 points under your current rate? Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it may be time to look into it. Refinancing has a number of advantages that will often make it worth the up-front expenditure a few times over.

Benefits

When you refinance, you may have the ability to reduce the interest rate and monthly payment , perhaps significantly. You may also have the option to "cash out" a portion of the built-up equity in your home, that you can use to consolidate debt, make home improvements, or finance a vacation. You may be able to refinance into a shorter-term mortgage program, giving you the ability to build your equity faster.

Expenses and Fees

Of course, you will have some fees and expenses during your process of refinancing. You will pay the same kinds of fees as with your existing home loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying discount points can result in a lower interest rate. Your savings over the life of the mortgage loan may be substantial if you've paid up front about three percent of the new loan total. Please consult a tax professional before acting on advice that any paid points may be deducted on your federal income taxes.

Another cost that borrowers might take into account is that a lower interest rate will lower the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (727) 478-2797.

Most borrowers find that the monthly savings outweigh the up-front cost of refinancing. We can help you find out what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (727) 478-2797 to get started.

Want to know more about refinancing your home? Call us: (727) 478-2797.

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