Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Maybe that was good advice several years ago, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing your loan has various advantages that can make it worth the initial expenditure many times over.
When you refinance, you may have the ability to lower the interest rate and mortgage payment , sometimes significantly. You could also have the option to "cash out" some of the built-up equity in your residence, that you will be able use to take care of higher interest debt, add on to your home, or finance a vacation. With lower rates, you may also be able to build up home equity faster by changing to a shorter term mortgage.
Expenses and Fees
All of these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can result in a lower interest rate. If you pay (on average) three percent of the loan amount at the start, your savings for the term of the new mortgage loan can be substantial. You may have heard that these points can be tax deductible, but since tax regulations can be ever-changing, please consult with your tax professional before considering this in your calculations.
Another thing about taxes is that when you lower your interest rate, naturally you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is another expense that borrowers consider. Call us at 3038627760 to help you do the math.
Most people find that the monthly savings quickly balance out the initial cost of a refinance. We'll work with you to determine which mortgage program is right for you, considering your cash on hand, how likely you are to sell your residence in the near future, and what effect refinancing will have on your taxes. Call us at 3038627760 to get started.
Want to know more about refinancing? Call us: 3038627760.