How much will it cost to refinance and what are the major benefits of refinancing?

If you are like most home owners you maybe having a hard time deciding to refinance your loan and have been wondering how to decide when to refinance your mortgage. More then likely you have heard the old advice the that says you should only refinance your current mortgage if you can a get a new home loan with an interest rate that is 2 points lower then you have now. While that might have been true a long time ago when refinancing was expensive it is not true today with the lower cost loans and no cost refinance options available to borrowers.

Benefits Of Refinancing

Refinancing your mortgage has alot of benefits that will generally make it worth the money it will cost your to refi your mortgage. For example when you refinance you will probably be able to lower your home loans interest rate and reduce your monthly payment a large amount at the same time.

Or if you have equity in your home you can even take cash out to pay off debt, do home improvements or buy whatever your heart desires! You may even be able to get a shorter term loan for a lower rate which will help you build equity faster and pay off your home sooner. Just keep in mind that as good as these benefits sound they do come with a cost.

Drawbacks To Refinancing

Anytime you refinance a mortgage you are paying fees that you paid when you took out your loan the first time. These fees include fees like appraisal, title fee, lenders fees and other underwriting and mortgage fees that are associated with a mortgage.

In some cases you may also have to pay a pre payment penalty on your current loan if you refinance to soon. Not all mortgages have pre pay penalties so you may want to check into that before you refinance. In some parts of the country pre payment penalties are illegal and in most cases if you have one they are tied to the loan for the first one to two years. We can help you figure all of this out so do not feel overwhelmed!

You can also pay points on your loan to get a lower interest rate from the lender. Do not be scared of paying points because over the life of the loan they can save you thousands of dollars in interest payments.

Even though they will save money on the total interest that you pay points are not tax deductible if you are refinancing unless you are taking money out primarily to do home improvements. So make sure that you always talk to a income tax professional before you deduct any discount points you paid towards your mortgage.

Another commonly overlooked fee is that if you lower the total amount of interest you pay on your mortgage you lower your mortgage interest income tax deduction which can slightly raise your taxes. But don't worry we can help you figure that all out! But even with these associated fees most people will make up the total cost of refinancing very quickly and usually recoup their costs within the first two to three years.

We will be happy to sit down with you and determine what mortgage loan refinance program suits your financial and future plans the best. So feel free to give one of our friendly and professional mortgage consultants a call anytime at (414)771-1200