Weighing the Options of Refinancing

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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points under your current rate? That might have been valid years ago, but with the fact that refinancing has been costing less recently, it's a good time to think about a new loan! Refinancing your mortgage has some benefits that often make it worth the initial expenditure a few times over.

Advantages

You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage. You may also be able to "cash out" some of the built-up equity in your residence, that you will be able use to take care of higher interest debts, make home improvements, or plan a vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build your home equity faster.

Expenses and Fees

As you probably expect, you'll have to pay for the the refinance process. You will be charged the same types of fees as with your existing home loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You could need to pay discount points (prepaid interest) to gain a lower interest rate. Your savings over the life of the mortgage loan might be significant if you've paid up front about three percent of the new loan total. You might have heard that these points may be tax deductible, but since tax regulations can be ever-changing, please consult with your tax professional before depending on this.

Another cost that a borrower might take into account is that a reduced rate of interest will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at (337) 264-9990.

All things considered, for most borrowers the total of initial costs to refinance will be made up very quickly in savings each month. We'll help you figure out which program is best for you, taking into account your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing could effect your taxes. Call us at (337) 264-9990 to get you started.

Curious about refinancing? Call us at (337) 264-9990.

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