Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least two points under your current rate? Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be a good time to look into it. A refinanced loan is often worth its cost many times over, factoring in the advantages that it brings, in addition to a lower interest rate.
Benefits
When you refinance, you may have the ability to lower your interest rate and monthly mortgage payment , perhaps significantly. You could also have the ability to "cash out" some of your home equity, which you are able use to consolidate debt, add on to your home, or take a vacation. With lower interest rates, you might also be able to build your home equity faster by changing to a shorter term mortgage loan.
Fees and Expenses
Of course, you will have some fees and expenses during the process of refinancing. You'll have the same kinds of expenses and fees as with your present home loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might think about paying points to reduce your interest rate. If you pay (on average) 3% of the loan amount up front, the savings for the term of the refinanced mortgage loan can be substantial. Please consult with a tax professional before acting on rumors that the paid points may be deducted on your federal income taxes.
An additional expense that borrowers may take into account is that a lower rate of interest will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 6784672330.
Most borrowers find that the savings per month outweigh the initial cost of refinancing. We will help you determine what mortgage program is the right fit for you, looking at your cash on hand, the likelihood of selling your house in the near future, and how refinancing will effect your taxes. Call us at 6784672330 to get started.
Want to know more about refinancing? Call us: 6784672330.