When is Refinancing Worth it?
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Some have said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. That may have been sound advice years ago, but with refinancing dropping in cost recently, it is never the wrong time to think about a new mortgage loan! Refinancing your loan has some benefits that will often make it worth the initial expenditure many times over.
Benefits from Refinancing
When you refinance, you could be able to reduce your interest rate and mortgage payment amount, perhaps considerably. You may also be able to "cash out" some of your equity, that you will be able use to take care of higher interest debts, add on to your home, or take a vacation. You might be able to refinance to a shorter-term mortgage program, enabling you to build your home equity quicker.
Expenses and Fees
All of these benefits do cost something, though. When you refinance, you're paying for most of the same things you were charged for during your current mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
You might think about paying points to reduce your interest rate. Your savings on the life of the loan may be substantial if you have paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on rumors that any points paid can be deducted on your taxes.
Speaking of taxes, if your interest rate is lowered, it follows that you will also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that borrowers take into account. We can help you do the math! Call us at 718-441-7000.
Most people find that the savings each month outweigh the up-front expenses of refinancing. We'll work with you to figure out which program is the ideal fit for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at 718-441-7000 to get started.
Want to know more about refinancing? Call us: 718-441-7000.