When to refinance

Ever heard the old rule of thumb that says you should only refinance if your new interest rate will be at least two points lower than your existing one? Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing has some benefits that will often make it worth the initial cost several times over.

Benefits

When you refinance, you may be able to lower the interest rate and monthly payment amount, perhaps significantly. You may also have the ability to "cash out" a portion of the built-up equity in your residence, that you may use to consolidate debt, make home improvements, or take a vacation. You could be able to refinance to a shorter-term mortgage program, giving you the ability to build your home equity quicker.

Fees and Expenses

As you probably know, you'll have some fees and expenses during the the refinance process. You will have the same types of expenses and fees as with your present mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Do the Math

Paying discount points can result in a better interest rate. The money you will save over the life of the mortgage loan may be significant if you've paid up front about three percent of the new loan total. You may hear that these points can be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to consult a tax professional before depending on this.

Another expense that borrowers may take into account is that a reduced interest rate will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 405.823.5961.

Most borrowers find that the monthly savings quickly balance out the initial cost of a refinance. We can help you find out your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your available cash. Call us at 405.823.5961 to get you started.