Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least 2 points under your existing one? Maybe several years ago that was good advice, but as refinance costs have been getting lower, it could be time to take a serious look. A refinance is often worth its cost several times over, considering the benefits that may come, along with a lower interest rate.

Benefits

When you refinance, you could have the ability to lower the interest rate and monthly payment , perhaps significantly. You may also have the ability to "cash out" a portion of your home equity, which you are able use to consolidate debts, make home improvements, or take a vacation. You could have the option to refinance into a shorter-term mortgage, giving you the ability to build up your equity quicker.

Expenses and Fees

Of course, you'll have some fees and expenses during the process of refinancing. With your refinance, you are paying for basically the same things you paid for when you got your existing mortgage. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying points can help you attain a lower interest rate. The money you will save on the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on rumors that any paid points can be deducted on your taxes.

An additional expense that a borrower may consider is that a lower rate of interest will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at (860) 658-7100.

In the end, for most people the total of up-front costs to refinance will be paid back soon in savings each month. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at (860) 658-7100 to get started.

Want to know more about refinancing your home? Call us at (860) 658-7100.