Is Refinancing Worth the Cost?
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In the market for a mortgage loan? We'd be thrilled to answer your questions about our mortgage offerings! Give us a call at 8165258000. Want to get started? Apply Now.
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points lower than your existing rate? That might have been true years ago, but since refinancing has been costing less over the last few years, it is a good time to consider a new mortgage! A refinanced loan is often worth its cost many times over, considering the benefits that it brings, as well as a reduced interest rate.
Benefits
You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced mortgage loan. Additionally, you might have the option of pulling out some of the equity in your property by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You may have the option to refinance into a shorter-term mortgage loan, enabling you to build your equity faster.
Expenses and Fees
Of course, you will have to pay for the process of refinancing. With your refinance, you're paying for basically the same things you paid for during your existing mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
Paying discount points can help you get a lower interest rate. The amount you'll save over the life of the loan may be significant if you've paid up front about 3% of the new loan balance. Please consult a tax professional before acting on rumors that these points paid can be deducted on your federal income taxes.
Another thing about taxes is that if you reduce your interest rate, of course you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another cost that some borrowers consider. We can help you do the math! Call us at 8165258000.
Ultimately, for most the total of up-front costs to refinance are paid back soon in monthly savings. We'll work with you to determine what mortgage loan program is best for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing will effect your taxes. Call us at 8165258000 to get started.
Curious about refinancing? Call us at 8165258000.