Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We'll be glad to answer your questions about your mortgage needs! Give us a call at 7072522700. Ready to begin? Apply Now.
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Some have said that only when your new interest will be at least two points below your current rate, should you refinance your mortgage. That could have been true years ago, but as refinancing has been costing less recently, it's a good time to consider a new loan! Refinancing your loan has a number of benefits that can make it worth the up-front expenditure several times over.
Benefits
When you refinance, you might be able to reduce your interest rate and mortgage payment , perhaps significantly. You might also be able to "cash out" a portion of your home equity, which you may use to take care of higher interest debts, improve your home, or plan a vacation. You could be able to refinance to a shorter-term mortgage program, giving you the ability to add to your home equity quicker.
The Cost
All these benefits do come with some expense, though. When you refinance, you're paying for basically the same things you paid for when you got your current mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying points can help you get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount up front, the savings for the term of the refinanced mortgage loan can be substantial. We recommend that you consult with a tax professional before acting on rumors that the paid points can be deducted on your taxes.
Another expense that borrowers might consider is that a lower rate of interest will lower the interest amount you'll be able to deduct from your federal income taxes. We can help you do the math! Call us at 7072522700.
Most people find that the monthly savings balance out the up-front expenses of refinancing. We will work with you to find out which program is perfect for you, considering your cash on hand, how likely you are to sell your home in the next few years, and how refinancing may effect your taxes. Call us at 7072522700 to get started.
Want to know more about refinancing? Call us: 7072522700.