Is Refinancing Worth the Cost?
Curious about refinancing? Give us a call at 970-625-8686.
It has been said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but as refinance costs have been getting lower, it could be time to look into it. A refinance may be worth its cost several times over, considering the advantages that it brings, along with a lower interest rate.
You may be able to lower your interest rate (sometimes substantially) and have smaller monthly payments with your refinanced mortgage. You may also be able to "cash out" some of the built-up equity in your residence, which you can use to take care of higher interest debt, add on to your home, or finance a vacation. You might be able to refinance into a shorter-term mortgage, enabling you to add to your home equity faster.
Expenses and Fees
As you probably know, you will have some fees and expenses during your the refinance process. When you refinance, you're paying for basically the same things you paid for at the time you obtained your existing mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
If you refinance your present loan too soon, there might be a penalty . It all depends on your present mortgage loan contract. There are penalties that apply only for the first couple of years. We'll help you figure it out: contact us at 970-625-8686.
Doing the Math
You might need to pay discount points (prepaid interest) to get a better interest rate. When you pay (on average) 3% of the mortgage loan amount initially, your savings for the term of the refinanced loan can be significant. You may hear that points may be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to speak with a tax professional before making decisions based on this.
Speaking of taxes, if your interest rate is lowered, of course you will also be reducing the interest amount that you can deduct on your federal income taxes. This is another expense that some borrowers consider. We can help you do the math! Call us at 970-625-8686.
Most people find that the monthly savings quickly balance out the up-front expenses of a refinance. We can help you figure out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 970-625-8686 to get you started.
Shopping for a mortgage? We'd be thrilled to talk about our mortgage offerings! Give us a call today at 970-625-8686. Want to get started? Apply Now