When is Refinancing Worth it?
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Are you looking for a mortgage loan? We can assist you! Call us at 4056158543. Ready to get started? Apply Here.
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Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least two points below your current rate? That may have been accurate a while back, but with the fact that refinancing has been costing less recently, it's a good time to explore the options of a new mortgage! A refinanced mortgage is often worth its cost several times over, considering the benefits that can come, as well as a reduced interest rate.
Benefits
When you refinance, you may be able to reduce the interest rate and monthly payment , sometimes by a lot. Additionally, you could be given the option of tapping into the equity in your house by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you may also get the chance to build your home equity faster by moving to a shorter term loan.
Fees and Expenses
As you probably know, you will have some fees and expenses during the the refinance process. When you refinance, you're paying for a lot of the same things you were charged for during your current mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Doing the Math
Paying discount points can result in a better interest rate. If you pay (on average) 3% of the mortgage loan amount initially, the savings for the life of the new mortgage can be significant. We recommend that you consult a tax professional before acting on advice that any paid points may be deducted on your federal income taxes.
Another thing about taxes is that once you lower your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 4056158543.
Most borrowers find that the monthly savings quickly balance out the up-front cost of refinancing. We'll work with you to find out which mortgage program is the right fit for you, considering your cash on hand, the likelihood of selling your house in the next few years, and what effect refinancing might have on your taxes. Call us at 4056158543 to get you started.
Curious about refinancing? Call us at 4056158543.