When is Refinancing Worth it?

Want to know more about refinancing? Call us: 281-542-7392.

It has been said that only if your new interest will be at least two points lower, should you refinance your loan. Maybe several years ago that was sage advice, but as refinance costs have been getting lower, it could be time to take a serious look. Refinancing your mortgage loan has some benefits that will often make it worth the up-front cost many times over.

Advantages

You might be able to lower your interest rate (sometimes significantly) and make smaller monthly payments with a refinanced loan. You might also be able to "cash out" a portion of the built-up equity in your residence, which you may use to consolidate debt, make home improvements, or finance a vacation. You could have the option to refinance to a shorter-term mortgage, enabling you to add to your home equity quicker.

The Cost

All of these benefits do cost something, though. When you refinance, you're paying for basically the same things you were charged for at the time you obtained your existing mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

You might be required to pay a penalty for refinancing your current mortgage too quickly. It all depends on your present mortgage loan contract. However, these penalties may apply only to the initial couple of years of the mortgage loan. We will help you figure it out: contact us at 281-542-7392.

Do the Math

Paying points can result in a better interest rate. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the new mortgage loan can be significant. You might be told that the points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, please consult your tax professional before making any decisions based on this.

Speaking of taxes, when you lower your interest rate, of course you'll also be reducing the interest amount that you may deduct from your taxes. This is one more cost that some borrowers take into account. Call us at 281-542-7392 to help you do the math.

In the end, for most borrowers the total of initial costs to refinance are paid back soon in monthly savings. We will work with you to determine which mortgage loan program is perfect for you, considering your cash on hand, the likelihood of selling your house in the near future, and how refinancing may effect your taxes. Call us at 281-542-7392 to get started.

In the market for a mortgage loan? We will be glad to assist you! Call us at 281-542-7392. Ready to get started? Apply Online Now.

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