When is Refinancing Worth it?
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Ever hear the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least 2 points under your existing one? Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it may be time to take a serious look. A refinanced loan is often worth its cost many times over, considering the benefits that can come, as well as a reduced interest rate.
Advantages
When you refinance, you might be able to lower the interest rate and monthly payment amount, perhaps considerably. Additionally, you might have the option of tapping into the equity in your home by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also be able to build up home equity faster by changing to a shorter term loan.
The Cost
Of course, you will have to pay for your the refinance process. When you refinance, you're paying for many of the same things you were charged for during your existing mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might look into paying points to be given a lower interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the refinanced mortgage loan can be substantial. We recommend that you talk to a tax professional before acting on hear-say that these points paid may be deducted on your federal income taxes.
Speaking of taxes, once your interest rate is lowered, naturally you will also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at 8165258000.
Ultimately, for most borrowers the total of initial costs to refinance will be paid back very quickly in monthly savings. We will help you determine what mortgage loan program is the best fit for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and how refinancing might effect your taxes. Call us at 8165258000 to get started.
Curious about refinancing your home? Call us: 8165258000.