Is Refinancing Worth the Cost?
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Ever hear the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least two points under your present rate? That could have been good advice a while back, but as refinancing has been costing less recently, it's a good time to think about a new mortgage! A refinance can be worth its cost several times over, because of the advantages that may come, in addition to a reduced interest rate.
Benefits from Refinancing
When you refinance, you might be able to reduce your interest rate and mortgage payment amount, perhaps significantly. Additionally, you could have the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With lower rates, you may also get the chance to build your home equity faster by switching to a shorter term mortgage.
All of these benefits do cost something, though. You'll pay the same sort of fees as with your current mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can result in a better interest rate. Your savings on the life of the mortgage loan could be substantial if you have paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on rumors that the paid points may be deducted on your taxes.
Another expense that a borrower may take into account is that a reduced rate of interest will lower the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at 7072522700.
Ultimately, for most people the total of initial costs to refinance will be made up soon in savings each month. We will work with you to determine which mortgage program is ideal for you, considering your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing may have on your taxes. Call us at 7072522700 to get you started.
Curious about refinancing? Give us a call: 7072522700.