Refinance
Many borrowers use a refinance to shorten term of the mortgage.
Another way to make a refinance work is for you is to refinance for more than the balance remaining on your old mortgage. With today’s low rates, you can tap into your equity without increasing your monthly payment.
By switching to a fixed rate loan, it is possible to reduce your payment and lock in at an attractive rate for as long as you own your home.
When you refinance your mortgage, you usually pay off your original mortgage and sign a new loan. With a new loan, you again pay most of the same costs you paid to get your original mortgage.
In refinancing, a mortgage company usually offers a range of interest rates at different amounts of points.
With a lower interest rate on your home loan, you will have less interest to deduct on your income tax return. That, of course, may increase your tax payments and decrease the total savings you might obtain from a new, lower interest mortgage.
Traditionally, the decision on whether or not to refinance has meant balancing the savings of a lower monthly payment against the costs of refinancing.
Considerations you should look at when deciding to refinance.