Weighing the Options of Refinancing

Curious about refinancing your home? Give us a call at 801.999.0493.

Have you ever heard the old rule of thumb that says you should only refinance if the new interest rate is at least 2 points below your existing rate? That could have been true a while back, but as refinancing has been costing less in recent years, it's a good time to explore the options of a new mortgage! Refinancing has some advantages that can make it worth the up-front cost many times over.

Benefits

When you refinance, you might be able to reduce your interest rate and monthly payment amount, sometimes significantly. You may also have the option to "cash out" a portion of your home equity, which you are able use to take care of higher interest debts, improve your home, or plan a vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to add to your home equity quicker.

The Cost

All of these advantages do come with some expense, though. You will be charged the same types of fees as with your existing mortgage. These could include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

When you refinance your current mortgage loan too quickly, there might be a penalty . It all depends on your present loan agreement. Some of the penalties apply only for the first year or two. We'll help you figure it out: contact us at 801.999.0493.

Doing the Math

You might look into paying points to get a reduced interest rate. The amount you'll save on the life of the loan may be significant if you've paid up front about three percent of the new loan balance. You may be told that the points can be deducted on your income taxes, but because tax regulations can be ever-changing, please speak with a tax professional before depending on this.

Another cost that a borrower might take into account is that a lower rate of interest will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at 801.999.0493 to help you do the math.

Most borrowers find that the savings each month quickly balance out the initial cost of refinancing. We'll work with you to determine what mortgage loan program is best for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. Call us at 801.999.0493 to get started.

Looking for a loan? We'd be thrilled to answer your questions about our many mortgage solutions! Give us a call today at 801.999.0493. Ready to get started? Apply Now.

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