Three Reasons It Makes Sense to Refinance

Can’t decide whether you should refinance?  Here are 3 reasons why it may make sense.

1. A little goes a long way.

Your interest rate doesn’t have to fall far for the savings to start adding up. Even paying a slightly higher interest rate in exchange for lower or no closing costs can result in lower monthly payments. If you take time to work the numbers being quoted by multiple refinance specialists, chances are good you’ll find a combination that works to your advantage.

2. Paying points may make sense.

One percent of the loan amount for each point seems like a high price to pay. But generally, the longer you plan to remain in your home, the more sense it makes to pay closing costs and points in order to get a lower interest rate.

3. You can roll closing costs into the loan balance.

Points and closing costs can easily add up to several thousand dollars and for many, that’s a huge out of pocket expense. But your lender might allow you to add the closing costs to the refinance amount. And believe it or not, doing so can result in a lower mortgage than the one being refinanced. This usually works for anyone who has made enough payments to reduce the balance of the original mortgage by a few thousand dollars. But that’s not all. With this approach, your monthly payments as well as your interest rate can end up lower too!