Refinance

Ever heard the old rule of thumb, you should only refinance if your new interest rate is at least one point lower? That may have been true years ago, but with refinancing dropping in cost over the last few years, it’s best to talk to a qualified mortgage analyst to figure out what makes good financial sense. Refinancing has a number of benefits that often make it worth the up-front expenditure many times over.

There are many different reasons to consider refinancing. When you refinance, you might be able to lower your interest rate and monthly payment — sometimes significantly. You might also be able to “cash out” some of the built-up equity in your home, which you can use to consolidate debt, improve your home, take a vacation — whatever your needs may be! With lower rates and balances, you might also be able to build up home equity faster with a shorter-term new mortgage.

All these benefits do cost something, in the form of closing costs. Almost all of the closing costs can be rolled into the loan, allowing you to keep your money in your pocket! It’s important to weigh the costs of refinancing against the benefits of doing so. This is another reason why it is important to work with an educated ENG mortgage consultant. We will make sure that it is in your best interests, financially, to refinance.

You can also opt to pay points to get a more favorable interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the life of the new mortgage can be significant. You should be aware that the IRS has recently said that points paid for the purpose of refinancing your mortgage cannot be deducted in their entirety in the year you pay them, unless the refinanced loan is primarily for home improvements. Consult your tax professional before deducting points you pay on your new mortgage from your federal income taxes.

One of the most important items to consider during this time is how long you plan on staying in your current home. There are different types of products to consider based on your answer. If you plan on being in your home for less than 5 years, a 5/1 ARM product will give you a lower rate than a traditional 15 or 30 year fixed. This is something you must talk to your ENG mortgage consultant about for more guidance.

Ultimately, for most people, it’s important to get the help you need to help make an educated decision about refinancing. That is where our expertise comes in! We’ll work with you to determine what program is best for you, considering your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing might have on your taxes.

Fill out an application online, or contact us at 724-776-4100 to talk further about the pros and cons of refinancing.

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