When is Refinancing Worth it?
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Shopping for a mortgage? We will be glad to assist you! Call us at 866-300-1550. Ready to get started? Apply Here.
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Some have said that only if your new interest will be at least 2 points below your current rate, should you refinance your loan. Maybe that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be a good time to look into it. Refinancing has a variety of advantages that often make it worth the up-front expenditure many times over.
Benefits
You may be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with your refinanced loan. You might also have the option to "cash out" some of the built-up equity in your home, which you can use to consolidate debts, make home improvements, or plan a vacation. You might be able to refinance to a shorter-term mortgage, enabling you to build up your home equity faster.
Fees and Expenses
All of these benefits do cost something, though. You will have to pay the same types of expenses and fees as you did with your current home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might consider paying points to be given a lower interest rate. When you pay (on average) three percent of the mortgage loan amount initially, the savings for the life of the refinanced loan can be great. You may hear that points may be tax deductible, but as tax regulations can be ever-changing, we urge you to consult with your tax professional before making any decisions based on this.
Another thing about taxes is that when you lower your interest rate, of course you'll also be reducing the interest amount that you will be able to deduct from your taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at 866-300-1550.
Most borrowers find that the savings each month outweigh the initial expenses of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your available cash. Call us at 866-300-1550 to get you started.
Want to know more about refinancing your home? Call us: 866-300-1550.