Weighing the Options of Refinancing

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Some have said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. Maybe several years ago that was wise advice, but since refinance costs have been getting lower, it may be time to look into it. Refinancing has some advantages that often make it worth the up-front expenditure several times over.

Benefits from Refinancing

You may be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced mortgage loan. Additionally, you might be given the option of tapping into the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build your home equity more quickly by changing to a shorter-term mortgage.

The Cost

All these advantages do come with some expense, though. You will have the same types 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

Paying discount points can help you attain a better interest rate. When you pay (on average) three percent of the loan amount at the start, your savings for the life of the new mortgage can be significant. Please consult with a tax professional before acting on rumors that these paid points can be deducted on your taxes.

One more cost that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at 425-392-2295.

In the end, for most borrowers the total of initial costs to refinance will be paid back very quickly in monthly savings. We will help you find out which program is right for you, looking at your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing could have on your taxes. Call us at 425-392-2295 to get you started.

Curious about refinancing your home? Call us at 425-392-2295.

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