Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least 2 points below your current rate, should you refinance your mortgage. Maybe several years ago that was sage advice, but as refinance costs have been getting lower, it may be time to look into it. Refinancing has a number of benefits that will often make it worth the initial cost many times over.
When you refinance, you may be able to lower the interest rate and monthly mortgage payment , perhaps by a lot. You also might 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 get the chance to build your home equity more quickly by switching to a shorter term mortgage.
As you probably expect, you will have to pay for your process of refinancing. When you refinance, you are paying for many of the same things you paid for during your original mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
Paying points can help you attain a better interest rate. Your savings on the life of the mortgage loan might be significant if you have paid up front about three percent of the new loan balance. We recommend that you talk to a tax professional before acting on rumors that any points paid can be deducted on your taxes.
Another cost that borrowers might take into account is that a lower interest rate will lower the interest amount you'll deduct from your taxes. Call us at (707) 252-2700 to help you do the math.
In the end, for most people the amount of initial costs to refinance are made up soon in savings each month. We'll work with you to figure out what program is ideal for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and how refinancing can effect your taxes. Call us at (707) 252-2700 to get started.
Curious about refinancing? Call us: (707) 252-2700.