Is Refinancing Worth the Cost?
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Ever hear the old rule of thumb that states you should only refinance if your new interest rate is at least 2 points below your present one? Perhaps that was good advice several years ago, but as refinance costs have been getting lower, it could be time to take a serious look. A refinanced loan is often worth its cost several times over, considering the benefits that may come, along with a reduced interest rate.
Advantages of Refinancing
When you refinance, you may be able to reduce the interest rate and monthly payment , perhaps considerably. You could also be able to "cash out" some of the built-up equity in your residence, which you may use to consolidate debts, make home improvements, or take a vacation. You may be able to refinance to a shorter-term mortgage program, giving you the ability to build your equity faster.
Expenses and Fees
All of these benefits do come with some expense, though. With your refinance, you are paying for many of the same things you were charged for when you got your current mortgage. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might investigate paying points to be given a reduced interest rate. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the new mortgage loan can be great. Please consult a tax professional before acting on rumors that any points paid may be deducted on your federal income taxes.
An additional expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at 4078987559.
Ultimately, for most people the amount of up-front costs to refinance will be made up very quickly in savings each month. We'll help you figure out which program is right for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing may have on your taxes. Call us at 4078987559 to get started.
Curious about refinancing? Call us: 4078987559.