Weighing the Options of Refinancing

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It has been said that only if your new interest is at least 2 points below your current rate, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it could be time to take a serious look. Refinancing your mortgage has a variety of benefits that can make it worth the initial expenditure a few times over.


When you refinance, you may have the ability to lower your interest rate and monthly mortgage payment amount, perhaps significantly. Additionally, you might be given the option of tapping into your home equity by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. You could have the option to refinance to a shorter-term mortgage program, giving you the ability to build up your equity faster.

Fees and Expenses

Of course, you'll have some fees and expenses during your the refinance process. When you refinance, you are paying for a lot of the same things you were charged for when you obtained your current mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

You might offer to pay points (prepaid interest) to attain a better interest rate. The money you will save over the life of the loan could be substantial if you have paid up front about three percent of the new loan total. You may hear that these points can be tax deductible, but because tax regulations are ever-changing, please speak with your tax professional before making decisions based on this.

Another expense that a borrower might consider is that a reduced rate of interest will reduce the interest amount you will deduct on your federal income taxes. Call us at 4078987559 to help you do the math.

Most people find that the monthly savings outweigh the initial expenses of refinancing. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 4078987559 to get started.

Want to know more about refinancing? Give us a call at 4078987559.

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