When is Refinancing Worth it?
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Some have said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it may be a good time to take a serious look. A refinance is often worth its cost many times over, considering the benefits that come, in addition to a lower interest rate.
Benefits from Refinancing
When you refinance, you may have the ability to reduce your interest rate and mortgage payment amount, sometimes by a lot. You may also have the option to "cash out" a portion of the built-up equity in your home, which you may use to consolidate debts, add on to your home, or take a vacation. With reduced interest rates, you might also be able to build up home equity faster by moving to a shorter-term mortgage.
The Cost
All these advantages do come with some expense, though. You'll have the same sort of fees as you did with your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You could need to pay discount points (prepaid interest) to gain a lower rate of interest. The money you'll save over the life of the mortgage loan may be significant if you have paid up front about three percent of the new loan total. We recommend that you talk to a tax professional before acting on hear-say that any paid points may be deducted on your federal income taxes.
One more expense that borrowers may take into account is that a lower interest rate will lower the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at 7068605514.
All things considered, for most people the total of initial costs to refinance will be paid back soon in monthly savings. We will help you find out what program is best for you, considering your cash on hand, the likelihood of selling your home in the near future, and how refinancing may effect your taxes. Call us at 7068605514 to get you started.
Curious about refinancing? Call us at 7068605514.