When is Refinancing Worth it?
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Some have said that only if your new interest is at least two points under your current rate, should you refinance your loan. That may have been valid years ago, but since refinancing has been costing less over the last few years, it is never the wrong time to consider a new loan! Refinancing your loan has various benefits that will often make it worth the up-front cost a few times over.
You could be able to lower your interest rate (sometimes by a lot) and have smaller monthly payments with your refinanced mortgage loan. You also might have the option of tapping into the equity in your house by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. You may have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity quicker.
Fees and Expenses
As you probably expect, you'll have some fees and expenses during the the refinance process. You'll be charged the same kinds of expenses and fees as you did with your current mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might look into paying points to receive a better interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the term of the refinanced loan can be great. You may be told that these points may be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to consult a tax professional before depending on this.
Speaking of taxes, when you reduce your interest rate, it follows that you'll also be reducing the interest amount that you'll be able to deduct from your taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at 3038627760.
Most borrowers find that the savings per month quickly balance out the up-front cost of refinancing. We will work with you to determine which loan program is best for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and how refinancing might effect your taxes. Call us at 3038627760 to get you started.
Curious about refinancing your home? Give us a call: 3038627760.