When is Refinancing Worth it?
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Ever heard the old rule of thumb that states you should only refinance if the new interest rate is at least two points lower than your current rate? That may have been true a while back, but as refinancing has been costing less recently, it's a good time to explore the options of a new mortgage! A refinanced mortgage loan can be worth its cost many times over, because of the advantages that come, along with a reduced interest rate.
Benefits from Refinancing
When you refinance, you could be able to lower your interest rate and mortgage payment , sometimes considerably. Additionally, you could be given the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage loan, enabling you to add to your home equity quicker.
Fees and Expenses
As you probably know, you'll have some fees and expenses during your process of refinancing. You'll have the same kinds of expenses and fees as with your present home loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might investigate paying points to reduce your interest rate. The money you will save on the life of the mortgage loan might be significant if you have paid up front about 3% of the new loan total. You may be told that these points may be deducted on your income taxes, but because tax regulations are ever-changing, please consult with a tax professional before depending on this.
Speaking of taxes, when your interest rate is lowered, of course you'll also be reducing the interest amount that you will be able to deduct from your federal income taxes. This is one more expense that some borrowers take into consideration. Call us at (405) 615-8543 to help you do the math.
Ultimately, for most the amount of initial costs to refinance are paid back soon in savings each month. We'll help you determine what mortgage loan program is right for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and how refinancing may effect your taxes. Call us at (405) 615-8543 to get you started.
Want to know more about refinancing? Call us: (405) 615-8543.