Is Refinancing Worth the Cost?
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It has been said that only when your new interest is at least two points below your current rate, should you refinance your mortgage. Perhaps that was sound advice several years ago, but as refinance costs have been falling recently, it may be time to take a serious look. A refinance is often worth its cost several times over, factoring in the benefits that it brings, along with a lower interest rate.
You might be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with a refinanced mortgage loan. Additionally, you might have the option of tapping into the equity in your house by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With reduced interest rates, you may also be able to build up home equity faster by moving to a shorter-term mortgage loan.
Fees and Expenses
As you probably expect, you'll have to pay for your the refinance process. You'll have the same types of fees as with your present home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You could offer to pay discount points (prepaid interest) to gain a lower rate of interest. When you pay (on average) 3% of the loan amount initially, your savings for the term of the refinanced mortgage loan can be significant. We recommend that you talk to a tax professional before acting on hear-say that any points paid may be deducted on your taxes.
Speaking of taxes, when your interest rate is reduced, of course you'll also be reducing the interest amount that you may deduct from your taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at 6784672330.
Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We will work with you to figure out what loan program is perfect for you, considering your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing will probably have on your taxes. Call us at 6784672330 to get started.
Want to know more about refinancing your home? Call us: 6784672330.