Weighing the Options of Refinancing

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Ever hear the old rule of thumb that states you should only refinance if the new interest rate will be at least 2 points lower than your current one? That could have been true years ago, but with refinancing dropping in cost in recent years, it's never the wrong time to consider a new loan! Refinancing your mortgage has a variety of benefits that often make it worth the initial cost several times over.


You may be able to lower your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced mortgage loan. You may also have the option to "cash out" some of the built-up equity in your home, which you are able use to take care of higher interest debt, improve your home, or finance a vacation. You might have the option to refinance into a shorter-term mortgage loan, enabling you to build up your equity quicker.

Expenses and Fees

As you probably expect, you'll have some fees and expenses during the the refinance process. You'll pay the same kinds of expenses and fees as with your current home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You could need to pay discount points (prepaid interest) to get a more favorable interest rate. Your savings over the life of the mortgage could be significant if you've paid up front about three percent of the new loan balance. Please talk to a tax professional before acting on hear-say that these points paid may be deducted on your federal income taxes.

Another thing about taxes is that when you reduce your interest rate, it follows that you will also be reducing the interest amount that you'll be able to deduct on your taxes. This is one more cost that borrowers take into consideration. We can help you do the math! Call us at (405) 615-8543.

Most borrowers find that the monthly savings quickly balance out the up-front cost of refinancing. We will work with you to figure out what mortgage loan program is right for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing can effect your taxes. Call us at (405) 615-8543 to get started.

Want to know more about refinancing? Call us at (405) 615-8543.

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