When is Refinancing Worth it?
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It has been said that only if your new interest is at least two points lower, should you refinance your loan. That may have been true years ago, but since refinancing has been costing less recently, it's a good time to think about a new loan! Refinancing your mortgage loan has some benefits that can make it worth the up-front expenditure a few times over.
You might be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage. Additionally, you could be given the option of tapping into the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage loan, enabling you to build your home equity faster.
Fees and Expenses
Of course, you'll have to pay for the process of refinancing. You'll have the same sort of fees as you did with your current mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying discount points can help you get a lower interest rate. When you pay (on average) three percent of the loan amount at the start, your savings for the term of the refinanced mortgage can be significant. You may hear that these points can be deducted on your income taxes, but as tax regulations are difficult to keep up with, we urge you to consult with a tax professional before depending on this.
Speaking of taxes, when you lower your interest rate, of course you'll also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is another cost that some borrowers consider. Call us at 4078987559 to help you do the math.
Ultimately, for most borrowers the amount of initial costs to refinance are made up very quickly in savings each month. We'll help you figure out which loan program is the best fit for you, considering your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing could have on your taxes. Call us at 4078987559 to get started.
Curious about refinancing your home? Call us: 4078987559.