Is Refinancing Worth the Cost?

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. Perhaps several years ago that was sage advice, but as refinance costs have been getting lower, it could be a good time to take a serious look. A refinanced loan may be worth its cost many times over, factoring in the advantages that may come, as well as a reduced interest rate.

Advantages of Refinancing

You could be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced mortgage loan. You also might have the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage loan, giving you the ability to build up your equity quicker.

Expenses and Fees

Of course, you'll have some fees and expenses during your the refinance process. You'll have the same kinds of expenses and fees as you did with your existing mortgage. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might look into paying points to reduce your interest rate. Your savings on the life of the mortgage might be significant if you have paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on hear-say that any paid points can be deducted on your taxes.

Speaking of taxes, once your interest rate is lowered, of course you'll also be lowering the interest amount that you'll be able to deduct from your taxes. This is another expense that some borrowers consider. Call us at (707) 252-2700 to help you do the math.

Ultimately, for most people the amount of up-front costs to refinance will be made up soon in savings each month. We will help you figure out what mortgage loan program is right for you, taking into account your cash on hand, the likelihood of selling your house in the next few years, and how refinancing can effect your taxes. Call us at (707) 252-2700 to get you started.

Curious about refinancing? Call us at (707) 252-2700.

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