When is Refinancing Worth it?

Curious about refinancing your home? Give us a call: 817-616-3651.

Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least two points lower than your current rate? That might have been accurate a while back, but as refinancing has been costing less recently, it's a good time to explore the options of a new loan! A refinance can be worth its cost many times over, because of the benefits that it brings, along with a reduced interest rate.

Advantages

You could be able to lower your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced loan. You may also have the ability to "cash out" a portion of your equity, which you may use to take care of higher interest debt, add on to your home, or finance a vacation. You might have the option to refinance into a shorter-term mortgage, enabling you to build up your home equity quicker.

The Cost

All these benefits do come with some expense, though. You'll be charged the same kinds of fees as you did with your current mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

You might have to make a penalty payment if you refinance your existing mortgage too soon. It all depends on your current mortgage loan contract. Some of the penalties just apply to the first year or two. We will help you figure it out: contact us at 817-616-3651.

Do the Math

Paying discount points can help you attain a lower interest rate. Your savings over the life of the loan might be substantial if you've paid up front about three percent of the new loan balance. You might hear that points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, we urge you to consult your tax professional before depending on this.

Another thing about taxes is that once you bring down your interest rate, naturally you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is one more cost that some borrowers consider. Call us at 817-616-3651 to help you do the math.

Most people find that the monthly savings balance out the initial expenses of refinancing. We will work with you to determine which loan program is best for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and the effect refinancing will have on your taxes. Call us at 817-616-3651 to get you started.

Looking for a loan? We will be glad to help! Give us a call at 817-616-3651. Want to get started? Apply Online Now.

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