Is Refinancing Worth the Cost?
Want to know more about refinancing? Call us: 310-686-1313.
It has been said that only in the case your new interest will be at least 2 points below your current rate, should you refinance your loan. Maybe that was sound advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to look into it. A refinance is often worth its cost several times over, considering the advantages that can come, as well as a reduced interest rate.
You might be able to bring down your interest rate (sometimes significantly) and have smaller monthly payments with your refinanced loan. You might also have the option to "cash out" a portion of your home equity, that you are able use to take care of higher interest debts, add on to your home, or plan a vacation. You could be able to refinance into a shorter-term mortgage program, enabling you to add to your home equity quicker.
Expenses and Fees
All these advantages do come with some expense, though. You will be charged the same types of expenses and fees as with your current home loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
You could be required to make a penalty payment if you refinance your current mortgage too soon. It depends on the rules of your present mortgage. There are penalties that just apply for the first year or two of the mortgage. We will help you sort through the details: contact us at 310-686-1313.
Doing the Math
You might consider paying points to reduce your interest rate. The amount you will save over the life of the mortgage could be substantial if you've paid up front about 3% of the new loan balance. You might have heard that the points may be deducted on your income taxes, but because tax regulations can be difficult to keep up with, please speak with your tax professional before making decisions based on this.
One more cost that borrowers might consider is that a reduced interest rate will lower the interest amount you will be able to deduct from your federal income taxes. Call us at 310-686-1313 to help you do the math.
All things considered, for most the amount of initial costs to refinance will be paid back soon in savings each month. We will work with you to determine what loan program is perfect for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and the effect refinancing could have on your taxes. Call us at 310-686-1313 to get you started.
Are you looking for a mortgage loan? We can assist you! Call us at 310-686-1313. Ready to get started? Apply Online Now