Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We can help! Call us at 3038627760. Want to get started? Apply Here.
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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate will be at least two points under your existing rate? That may have been accurate a while back, but with refinancing dropping in cost recently, it is a good time to think about a new loan! Refinancing your mortgage has a variety of benefits that often make it worth the initial expenditure a few times over.
Benefits from Refinancing
When you refinance, you could have the ability to reduce your interest rate and mortgage payment amount, perhaps by a lot. You may also be able to "cash out" a portion of the built-up equity in your residence, which you are able use to take care of higher interest debts, make home improvements, or finance a vacation. You may have the option to refinance into a shorter-term mortgage loan, enabling you to add to your home equity faster.
Fees and Expenses
All of these advantages do come with some expense, though. You'll be charged the same kinds of fees as with your current mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might offer to pay discount points (prepaid interest) to gain a more favorable rate of interest. When you pay (on average) three percent of the loan amount up front, the savings for the term of the new loan can be great. You may have heard that points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please speak with your tax professional before considering this in your calculations.
Another expense that borrowers may consider is that a reduced rate of interest will lower the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 3038627760.
Most borrowers find that the savings each month quickly balance out the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 3038627760 to get you started.
Want to know more about refinancing? Call us at 3038627760.