Weighing the Options of Refinancing

Curious about refinancing? Give us a call at (208) 726-5466.

Some have said that only when your new interest is at least two points lower, should you refinance your loan. Maybe that was sound advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage loan can be worth its cost several times over, factoring in the advantages that can come, as well as a reduced interest rate.

Advantages

You could be able to bring down your interest rate (sometimes substantially) and make smaller mortgage payments with a refinanced mortgage. You could also be able to "cash out" some of your equity, that you will be able use to consolidate debt, improve your home, or plan a vacation. You may have the option to refinance to a shorter-term mortgage program, giving you the ability to build your home equity quicker.

Expenses and Fees

All these advantages do cost something, though. You will have to pay the same types of fees as with your present home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

You might have to make a penalty payment for refinancing your present mortgage loan too quickly. It all depends on your existing mortgage loan contract. Some of these penalties apply only to the first couple of years. We will help you figure it out: contact us at (208) 726-5466.

Do the Math

You could need to pay discount points (prepaid interest) to attain a better interest rate. Your savings over the life of the loan may be substantial if you have paid up front about three percent of the new loan total. Please talk to a tax professional before acting on hear-say that any paid points can be deducted on your taxes.

Another thing about taxes is that when you reduce your interest rate, of course you will also be reducing the interest amount that you will be able to deduct from your federal income taxes. This is one more expense that borrowers take into consideration. Call us at (208) 726-5466 to help you do the math.

Ultimately, for most the total of up-front costs to refinance are made up very quickly in savings each month. We'll work with you to determine what loan program is right for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and how refinancing could effect your taxes. Call us at (208) 726-5466 to get you started.

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