When is Refinancing Worth it?
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Ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least two points lower than your existing one? Perhaps several years ago that was sage advice, but as refinance costs have been getting lower, it may be a good time to look into it. A refinanced mortgage loan may be worth its cost many times over, factoring in the advantages that it brings, along with a lower interest rate.
Advantages
When you refinance, you might be able to reduce your interest rate and monthly mortgage payment amount, perhaps considerably. Additionally, you may have the option of pulling out some of the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You may be able to refinance into a shorter-term mortgage program, giving you the ability to build your home equity quicker.
Fees and Expenses
All of these benefits do cost something, though. You will be charged the same types of fees as you did with your present home loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying discount points can help you attain a lower interest rate. Your savings on the life of the mortgage might be substantial if you have paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on advice that the paid points may be deducted on your federal income taxes.
An additional expense that borrowers may consider is that a lower interest rate will lower the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 2603382561.
Ultimately, for most people the total of initial costs to refinance will be made up soon in savings each month. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your cash on hand. Call us at 2603382561 to get started.
Curious about refinancing your home? Call us: 2603382561.