Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Maybe several years ago that was sage advice, but since refinance costs have been falling recently, it may be a good time to look into it. A refinance may be worth its cost several times over, because of the benefits that come, as well as a reduced interest rate.
Benefits
You might be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage loan. You also may have the option of pulling out some of your home equity by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build your home equity faster by moving to a shorter-term mortgage loan.
Expenses and Fees
All of these advantages do come with some expense, though. When you refinance, you are paying for a lot of the same things you were charged for during your existing mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might look into paying points to reduce your interest rate. The money you will save on the life of the mortgage may be substantial if you have paid up front about 3% of the new loan total. Please talk to a tax professional before acting on rumors that the paid points may be deducted on your taxes.
Another expense that borrowers might consider is that a reduced rate of interest will lower the interest amount you will deduct from your federal income taxes. Call us at 6784672330 to help you do the math.
All things considered, for most the total of initial costs to refinance will be paid back soon in savings each month. We'll help you determine what mortgage loan program is right for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and how refinancing could effect your taxes. Call us at 6784672330 to get you started.
Curious about refinancing your home? Give us a call: 6784672330.