Weighing the Options of Refinancing

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Some have said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it could be time to take a serious look. Refinancing your loan has a number of advantages that often make it worth the initial cost a few times over.

Benefits

You might be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage. Additionally, you may be given the option of pulling out some of the equity in your home by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage loan, enabling you to add to your home equity faster.

The Cost

All these advantages do come with some expense, though. When you refinance, you are paying for a lot of the same things you were charged for when you got your original mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying discount points can help you get a better interest rate. Your savings on the life of the mortgage might be significant if you've paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on advice that any paid points can be deducted on your taxes.

One more expense that a borrower might take into account is that a reduced interest rate will lower the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at (317)594-9800.

Ultimately, for most people the amount of up-front costs to refinance will be paid back very quickly in savings each month. We will work with you to find out which program is the best fit for you, considering your cash on hand, the likelihood of selling your residence in the near future, and how refinancing might effect your taxes. Call us at (317)594-9800 to get you started.

Want to know more about refinancing your home? Call us: (317)594-9800.