Is Refinancing Worth the Cost?
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It has been said that only when your new interest will be at least two points lower, should you refinance your mortgage. That may have been sound advice a while back, but since refinancing has been costing less over the last few years, it is never the wrong time to explore the options of a new mortgage loan! A refinanced mortgage is often worth its cost many times over, because of the benefits that can come, as well as a reduced interest rate.
Advantages of Refinancing
You might be able to bring down your interest rate (sometimes by a lot) and make smaller monthly payments with your refinanced loan. You also may be given 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. With lower interest rates, you might also get the chance to build your home equity more quickly by changing to a shorter term mortgage.
Of course, you'll have to pay for the process of refinancing. You'll be charged the same sort of fees as you did with your present mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You could offer to pay points (prepaid interest) to get a more favorable rate of interest. If you pay (on average) three percent of the loan amount at the start, your savings for the term of the refinanced loan can be substantial. You might hear that the points can be deducted on your income taxes, but as tax regulations are ever-changing, please consult a tax professional before making decisions based on this.
Another expense that borrowers might consider is that a lower interest rate will reduce the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 718-441-7000.
All things considered, for most people the total of initial costs to refinance are made up soon in monthly savings. We'll help you figure out what mortgage program is ideal for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. Call us at 718-441-7000 to get started.
Want to know more about refinancing your home? Call us at 718-441-7000.