Weighing the Options of Refinancing
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It has been said that only if your new interest will be at least 2 points under your current rate, should you refinance your loan. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to look into it. Refinancing your mortgage has some advantages that will often make it worth the initial cost a few times over.
Advantages of Refinancing
You could be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage. You may also have the option to "cash out" a portion of the built-up equity in your home, that you will be able use to consolidate debts, add on to your home, or finance a vacation. With reduced interest rates, you may also get the chance to build up home equity faster by switching to a shorter term mortgage loan.
Expenses and Fees
All of these benefits do cost something, though. You'll have to pay the same types of expenses and fees as with your present home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might offer to pay points (prepaid interest) to gain a lower interest rate. When you pay (on average) 3% of the loan amount at the start, the savings for the life of the new mortgage can be great. You may have heard that points may be tax deductible, but since tax regulations are ever-changing, please consult with your tax professional before depending on this.
Speaking of taxes, if your interest rate is reduced, it follows that you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is one more cost that some borrowers consider. Call us at 6784672330 to help you do the math.
Most people find that the savings per month outweigh the initial expenses of a refinance. We will help you find out what mortgage loan program is best for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will have on your taxes. Call us at 6784672330 to get started.
Want to know more about refinancing? Give us a call at 6784672330.