When is Refinancing Worth it?
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Shopping for a mortgage? We'd be thrilled to discuss our mortgage offerings! Give us a call at 4078987559. Want to get started? Apply Here.
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Ever hear the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least two points below your current rate? Maybe that was sound advice a number of years ago, but as refinance costs have been getting lower, it may be a good time to look into it. A refinanced loan can be worth its cost many times over, factoring in the benefits that it brings, as well as a lower interest rate.
Benefits
You could be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. You could also have the ability to "cash out" some of the built-up equity in your home, that you will be able use to take care of higher interest debts, add on to your home, or finance a vacation. With reduced interest rates, you may also get the chance to build up home equity more quickly by moving to a shorter term mortgage loan.
Fees and Expenses
All of these advantages do come with some expense, though. You'll be charged the same types of expenses and fees as with your present mortgage. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can result in a better interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the term of the new mortgage can be great. Please talk to a tax professional before acting on rumors that the points paid may be deducted on your taxes.
Another thing about taxes is that if you reduce your interest rate, of course you'll also be lowering the interest amount that you may deduct on your federal income taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 4078987559.
In the end, for most the total of initial costs to refinance will be made up soon in savings each month. We will work with you to determine which mortgage program is right for you, considering your cash on hand, the likelihood of selling your home in the next few years, and how refinancing could effect your taxes. Call us at 4078987559 to get started.
Want to know more about refinancing? Call us: 4078987559.