Is Refinancing Worth the Cost?

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Some have said that only if your new interest will be at least two points below your current rate, should you refinance your mortgage. That could have been accurate years ago, but since refinancing has been costing less over the last few years, it is a good time to think about a new mortgage! Refinancing your loan has various benefits that can make it worth the up-front cost a few times over.

Benefits

When you refinance, you could be able to reduce the interest rate and monthly mortgage payment amount, sometimes by a lot. You could also have the option to "cash out" some of the built-up equity in your home, that you are able use to take care of higher interest debt, improve your home, or finance a vacation. With reduced rates, you may also be able to build up home equity more quickly by switching to a shorter-term mortgage.

The Cost

All these advantages do come with some expense, though. You'll be charged the same kinds of fees as you did with your present mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying points can help you attain a better interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the life of the refinanced loan can be substantial. You may have heard that these points may be tax deductible, but as tax regulations are difficult to keep up with, we urge you to speak with a tax professional before making any decisions based on this.

Speaking of taxes, when your interest rate is lowered, naturally you will also be lowering the interest amount that you can deduct on your federal income taxes. This is one more expense that some borrowers take into consideration. Call us at 3038627760 to help you do the math.

Most borrowers find that the monthly savings balance out the initial expenses of a refinance. We will work with you to determine which mortgage program is perfect for you, considering your cash on hand, how likely you are to sell your house in the near future, and the effect refinancing might have on your taxes. Call us at 3038627760 to get started.

Curious about refinancing your home? Call us at 3038627760.