Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points below your present rate? Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it could be a good time to look into it. A refinance can be worth its cost many times over, considering the benefits that it brings, in addition to a lower interest rate.

Advantages of Refinancing

When you refinance, you may be able to lower your interest rate and monthly mortgage payment , perhaps by a lot. You might also be able to "cash out" some of your equity, which you will be able use to take care of higher interest debts, improve your home, or plan a vacation. You might have the option to refinance to a shorter-term mortgage loan, enabling you to build your equity faster.

The Cost

Of course, you'll have some fees and expenses during the process of refinancing. With your refinance, you're paying for basically the same things you were charged for during your current mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

You might investigate paying points to reduce your interest rate. The amount you'll save over the life of the mortgage might be significant if you have paid up front about 3% of the new loan balance. Please talk to a tax professional before acting on hear-say that these paid points can be deducted on your taxes.

Another expense that borrowers may consider is that a lower rate of interest will lower the interest amount you'll deduct from your taxes. Call us at 3038627760 to help you do the math.

All things considered, for most borrowers the total of initial costs to refinance are paid back soon in monthly savings. We'll work with you to determine which program is perfect for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and how refinancing could effect your taxes. Call us at 3038627760 to get started.

Want to know more about refinancing? Call us at 3038627760.