Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least two points lower, should you refinance your mortgage. Maybe several years ago that was sage advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinance may be worth its cost many times over, because of the advantages that may come, in addition to a reduced interest rate.

Benefits from Refinancing

You may be able to lower your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced mortgage loan. You could also have the option to "cash out" a portion of the built-up equity in your residence, that you can use to consolidate debts, make home improvements, or finance a vacation. With reduced interest rates, you may also be able to build up home equity faster by switching to a shorter term mortgage.

The Cost

All these advantages do cost something, though. You'll have the same sort of expenses and fees as with your present mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You could need to pay discount points (prepaid interest) to attain a lower interest rate. The money you'll save on the life of the loan may be significant if you've paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on advice that any points paid can be deducted on your federal income taxes.

An additional expense that a borrower may take into account is that a lower rate of interest will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at 7072522700.

Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We will help you find out which loan program is the right fit for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing will effect your taxes. Call us at 7072522700 to get started.

Curious about refinancing? Call us: 7072522700.

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