Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least two points under your current rate, should you refinance your loan. That could have been valid a while back, but with refinancing dropping in cost recently, it is never the wrong time to explore the options of a new mortgage! Refinancing has a variety of advantages that often make it worth the up-front expenditure many times over.

Advantages of Refinancing

You could be able to bring down your interest rate (sometimes significantly) and have smaller monthly payments with a refinanced mortgage. You also may be given the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage loan, enabling you to add to your home equity faster.

The Cost

All of these advantages do cost something, though. When you refinance, you're paying for most of the same things you paid for when you got your original mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can result in a better interest rate. The money you'll save on the life of the mortgage loan may be significant if you've paid up front about 3% of the new loan total. Please talk to a tax professional before acting on hear-say that the paid points can be deducted on your taxes.

An additional expense that a borrower may consider is that a reduced interest rate will lower the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at (650) 689-5684.

Ultimately, for most the total of up-front costs to refinance will be made up soon in savings each month. We can help you find out your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at (650) 689-5684 to get you started.

Want to know more about refinancing your home? Call us: (650) 689-5684.

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