Does refinancing make sense? If you’re not sure when refinancing your mortgage makes sense, never fear. There’s a simple way of determining whether or not you are at an advantageous place to refinance.
What is refinancing? When you adjust the interest rates on your mortgage, typically making for smaller monthly payments.
When would you refinance?
- When mortgage rates are significantly lower than when you purchased your home.
- When you have no intention of moving in the near future (it costs money to refinance, so why bother if you’re moving in 2 years time).
- If its advantageous to your tax situation. The interest you pay on your mortgage is tax deductible, so get your accountants blessing before refinancing.
What are some of the cons of refinancing?
- The lower the monthly payments, the more years you’ll be paying off your mortgage.
- With a decrease in the interest you’re paying, the less mortgage interest you’ll deduct, and therefore the higher you’re income taxes will be.
Refinancing makes sense if you’re able to secure a significantly lower interest rate on your mortgage and you’re happy to pay less for longer AND you don’t mind paying more on your income taxes in the meanwhile.
If you’re still not sure, talk to a professional.
Does refinancing make sense?