When is Refinancing Worth it?
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Are you looking for a new mortgage loan? We can help! Call us at (713) 667-5472. Ready to begin? Apply Online Now.
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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points lower than your existing one? That could have been accurate years ago, but since refinancing has been costing less in recent years, it is a good time to consider a new loan! Refinancing has various advantages that will often make it worth the initial expenditure many times over.
Advantages
When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment , sometimes significantly. Additionally, you might be given the option of pulling out some of the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build your home equity more quickly by changing to a shorter-term loan.
The Cost
As you probably expect, you'll have to pay for your process of refinancing. When you refinance, you are paying for basically the same things you were charged for during your existing mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can get you a lower interest rate. Your savings over the life of the loan may be substantial if you've paid up front about 3% of the new loan total. You might have heard that these points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, we urge you to speak with your tax professional before depending on this.
One more expense that a borrower may consider is that a reduced interest rate will reduce the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at (713) 667-5472.
Most people find that the monthly savings balance out the initial cost of a refinance. We will work with you to find out which loan program is best for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing will probably have on your taxes. Call us at (713) 667-5472 to get started.
Curious about refinancing? Give us a call: (713) 667-5472.