Weighing the Options of Refinancing

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Some have said that only if your new interest will be at least two points lower, should you refinance your mortgage. Maybe that was good advice several years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing your mortgage has some advantages that can make it worth the up-front cost a few times over.

Benefits from Refinancing

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

The Cost

All of these advantages do cost something, though. When you refinance, you are paying for basically the same things you paid for during your original mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might look into paying points to reduce your interest rate. The amount you will save over the life of the mortgage may be substantial if you have paid up front about 3% of the new loan balance. Please consult with a tax professional before acting on hear-say that the paid points may be deducted on your federal income taxes.

One more cost that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at (407) 898-7559.

Most people find that the savings each month balance out the initial expenses of refinancing. We'll work with you to figure out what mortgage program is the right fit for you, considering your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing may have on your taxes. Call us at (407) 898-7559 to get started.

Curious about refinancing? Give us a call: (407) 898-7559.

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