When is Refinancing Worth it?
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According to some sources, you should only refinance your mortgage if your new interest rate is at least a point lower than your current interest rate. It might have been wise advice several years ago, but given the downward trend in refinancing costs, it may be the ideal time to take another look at the issue. When considering the benefits of refinancing and the lower interest rate, a refinanced mortgage is often worth its cost many times over.
Benefits
With a refinanced mortgage loan, you may be able to reduce your interest rate (sometimes significantly) and reduce your monthly mortgage payment. Further, you may have the option of utilizing your home equity by "cashing out" some money to renovate your home, consolidate your debt, or take a family vacation. You may be able to refinance to a shorter-term mortgage program, thereby increasing your home equity more quickly.
The Cost
All of these advantages are not without a cost, however. When you refinance, you pay for essentially the same things that you paid for when you obtained your current mortgage loan. Among the costs may be settlement costs, an appraisal, lender's title insurance, underwriting fees, etc.
Doing the Math
If you are looking for a better interest rate you might consider paying points (prepaid interest), also known as a rate buy-down. The experts at Omni Mortgage Company with run a break-even analysis to show you exactly what this savings will be and then discuss whether it is worth the buy-down cost for your situation. Contact us at (603) 893-6616 for assistance.
Most people find that refinancing is worth it in the long run because of the monthly savings. With our help, you'll see which mortgage program fits your needs best, considering your cash on hand, whether or not you intend to sell your home soon, and the tax implications of refinancing. You can reach us at (603) 893-6616 for more information.
Questions about refinancing? Contact Omni today at (603) 893-6616!