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 below your current rate, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it could be time to take a serious look. Refinancing has various benefits that will often make it worth the up-front expenditure several times over.
Benefits from Refinancing
You may be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage loan. You may also have the option to "cash out" some of the built-up equity in your home, which you may use to take care of higher interest debt, improve your home, or plan a vacation. With reduced rates, you may also be able to build up home equity faster by switching to a shorter term mortgage loan.
Expenses and Fees
All of these benefits do cost something, though. When you refinance, you're paying for basically the same things you paid for during your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying points can get you a lower interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, the savings for the term of the new mortgage can be substantial. You might hear that points may be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to consult a tax professional before making any decisions based on this.
Another cost that borrowers might consider is that a lower interest rate will lower the interest amount you will deduct from your federal income taxes. Call us at 3038627760 to help you do the math.
Most people find that the monthly savings balance out the up-front expenses of refinancing. We will help you determine which mortgage loan program is the right fit for you, looking at your cash on hand, the likelihood of selling your home in the near future, and how refinancing might effect your taxes. Call us at 3038627760 to get you started.
Want to know more about refinancing? Call us at 3038627760.