When is Refinancing Worth it?
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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your loan. Perhaps several years ago that was wise advice, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing has a number of advantages that will often make it worth the initial cost a few times over.
Benefits from Refinancing
When you refinance, you may have the ability to lower the interest rate and mortgage payment , perhaps significantly. You may also have the option to "cash out" some of your home equity, which you can use to take care of higher interest debts, add on to your home, or finance a vacation. With lower rates, you might also be able to build your home equity faster by changing to a shorter-term mortgage.
Fees and Expenses
Of course, you'll have to pay for the process of refinancing. You will be charged the same sort of expenses and fees as you did with your current mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can result in a lower interest rate. Your savings over the life of the mortgage loan might be significant if you have paid up front about 3% of the new loan total. Please consult with a tax professional before acting on advice that the points paid may be deducted on your federal income taxes.
Speaking of taxes, when your interest rate is reduced, of course you will also be reducing the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that borrowers take into account. We can help you do the math! Call us at 7072522700.
Most borrowers find that the savings each month quickly balance out the initial expenses of a refinance. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 7072522700 to get started.
Curious about refinancing your home? Call us at 7072522700.