Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We will be glad to assist you! Give us a call at 7184417000. Ready to begin? Apply Here.
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Ever hear the pearl of wisdom that says you should only consider refinancing if your new interest rate will be at least 2 points below your existing rate? Maybe that was sound advice several years ago, but since refinance costs have been falling recently, it could be time to take a serious look. Refinancing your mortgage has some advantages that often make it worth the initial expenditure many times over.
Benefits from Refinancing
When you refinance, you may be able to lower the interest rate and monthly payment amount, perhaps considerably. You could also have the ability to "cash out" a portion of your home equity, which you can use to take care of higher interest debts, improve your home, or plan a vacation. You might be able to refinance to a shorter-term mortgage loan, enabling you to add to your equity faster.
Fees and Expenses
As you probably expect, you will have to pay for your the refinance process. With your refinance, you are paying for basically the same things you paid for when you obtained your existing mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You could offer to pay points (prepaid interest) to get a more favorable interest rate. Your savings over the life of the mortgage may be substantial if you've paid up front about 3% of the new loan total. You might be told that points may be tax deductible, but as tax regulations can be difficult to keep up with, please consult your tax professional before considering this in your calculations.
Another expense that a borrower might take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 7184417000.
In the end, for most people the amount of up-front costs to refinance are made up soon in savings each month. We can help you figure out your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 7184417000 to get you started.
Curious about refinancing your home? Call us at 7184417000.