Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate will be at least two points below your current rate? That could have been accurate years ago, but with the fact that refinancing has been costing less in recent years, it is a good time to think about a new mortgage loan! Refinancing has various benefits that will often make it worth the initial cost many times over.


When you refinance, you could have the ability to lower the interest rate and mortgage payment amount, perhaps significantly. Additionally, you might have the option of tapping into the equity in your house by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You may be able to refinance to a shorter-term mortgage, giving you the ability to build up your equity faster.

Fees and Expenses

Of course, you'll have some fees and expenses during your the refinance process. With your refinance, you're paying for most of the same things you paid for during your existing mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might investigate paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the new mortgage can be great. You might be told that these points may be deducted on your income taxes, but since tax regulations can be ever-changing, please consult a tax professional before making decisions based on this.

An additional expense that a borrower may take into account is that a lower rate of interest will reduce the interest amount you will be able to deduct from your taxes. Call us at (260) 338-2561 to help you do the math.

All things considered, for most people the total of up-front costs to refinance are made up very quickly in savings each month. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at (260) 338-2561 to get started.

Want to know more about refinancing your home? Call us at (260) 338-2561.

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