Weighing the Options of Refinancing
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It has been said that only in the case your new interest is at least two points lower, should you refinance your mortgage. That may have been true years ago, but with refinancing dropping in cost over the last few years, it is never the wrong time to consider a new loan! A refinanced mortgage can be worth its cost several times over, because of the benefits that come, along with a reduced interest rate.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. Additionally, you may be given the option of tapping into the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build your home equity more quickly by switching to a shorter-term mortgage loan.
Of course, you will have to pay for your the refinance process. With your refinance, you are paying for a lot of the same things you were charged for during your current mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might offer to pay points (prepaid interest) to gain a more favorable rate of interest. The money you'll save over the life of the mortgage loan may be substantial if you have paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on hear-say that these paid points may be deducted on your taxes.
Another cost that borrowers might take into account is that a lower rate of interest will lower the interest amount you will be able to deduct from your taxes. Call us at (816) 525-8000 & (81 to help you do the math.
Most people find that the monthly savings outweigh the initial cost of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the next couple of years, and your cash on hand. Call us at (816) 525-8000 & (81 to get you started.
Curious about refinancing? Give us a call: (816) 525-8000 & (81.
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