When is Refinancing Worth it?
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Shopping for a mortgage loan? We'd be thrilled to answer your questions about your mortgage needs! Call us at 7072522700. Ready to get started? Apply Now.
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It has been said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your loan. Maybe that was good advice several years ago, but since refinance costs have been falling recently, it may be time to look into it. Refinancing has some benefits that will often make it worth the up-front cost several times over.
Advantages
You may be able to lower your interest rate (sometimes significantly) and reduce your monthly payment amount with a refinanced loan. You may also have the ability to "cash out" a portion of your home equity, which you may use to consolidate debt, improve your home, or plan a vacation. You could have the option to refinance to a shorter-term mortgage, enabling you to build your equity quicker.
Expenses and Fees
All these benefits do cost something, though. You will be charged the same types of expenses and fees as you did with your existing mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might consider paying points to reduce your interest rate. The money you will save on the life of the mortgage could be substantial if you have paid up front about 3% of the new loan balance. You may hear that these points can be deducted on your income taxes, but because tax regulations are ever-changing, please consult with a tax professional before considering this in your calculations.
Speaking of taxes, once you lower your interest rate, it follows that you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is one more expense that some borrowers take into account. Call us at 7072522700 to help you do the math.
All things considered, for most the amount of up-front costs to refinance are made up very quickly in savings each month. We'll work with you to determine which loan program is best for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and how refinancing may effect your taxes. Call us at 7072522700 to get started.
Curious about refinancing your home? Call us: 7072522700.