Is Refinancing Worth the Cost?
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In the market for a new mortgage? We'll be glad to discuss our mortgage offerings! Give us a call today at 802-253-2055. Ready to begin? Apply Online Now.
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points lower than your existing rate? That may have been sound advice a while back, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new mortgage loan! A refinance is often worth its cost many times over, considering the benefits that it brings, in addition to a reduced interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced mortgage. You could also have the option to "cash out" a portion of the built-up equity in your home, which you will be able use to take care of higher interest debt, add on to your home, or finance a vacation. You could have the option to refinance to a shorter-term mortgage program, enabling you to build up your home equity faster.
Expenses and Fees
Of course, you will have to pay for your process of refinancing. You will have to pay the same kinds of fees as with your current mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might offer to pay points (prepaid interest) to get a better interest rate. The amount you will save on the life of the loan may be substantial if you have paid up front about three percent of the new loan balance. You may be told that these points may be tax deductible, but because tax regulations are ever-changing, please consult your tax professional before making decisions based on this.
Speaking of taxes, if you reduce your interest rate, of course you will also be lowering the paid interest amount that you will be able to deduct from your federal income taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 802-253-2055.
Most people find that the monthly savings balance out the up-front expenses of a refinance. We'll help you find out which program is perfect for you, considering your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing may have on your taxes. Call us at 802-253-2055 to get started.
Want to know more about refinancing? Call us: 802-253-2055.
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