When is Refinancing Worth it?
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In the market for a mortgage? We can assist you! Give us a call today at 6507631924. Want to get started? Apply Now.
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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate will be at least two points lower than your present rate? That might have been valid a while back, but with the fact that refinancing has been costing less recently, it is never the wrong time to explore the options of a new loan! Refinancing your mortgage has some benefits that often make it worth the initial cost a few times over.
Advantages
When you refinance, you may have the ability to reduce your interest rate and monthly payment , sometimes considerably. You could also be able to "cash out" a portion of your home equity, that you can use to consolidate debts, add on to your home, or finance a vacation. With reduced rates, you may also be able to build your home equity more quickly by moving to a shorter-term mortgage loan.
The Cost
All these benefits do cost something, though. With your refinance, you are paying for basically the same things you paid for at the time you got your existing mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might look into paying points to reduce your interest rate. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the refinanced loan can be substantial. You may be told that these points can be deducted on your income taxes, but since tax regulations are difficult to keep up with, please speak with your tax professional before depending on this.
Speaking of taxes, once you bring down your interest rate, it follows that you will also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers consider. Call us at 6507631924 to help you do the math.
In the end, for most the amount of up-front costs to refinance are paid back very quickly in monthly savings. 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 cash on hand. Call us at 6507631924 to get you started.
Want to know more about refinancing? Call us at 6507631924.