Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only refinance if your new interest rate will be at least two points under your current one? That may have been valid a while back, but with refinancing dropping in cost in recent years, it's never the wrong time to explore the options of a new mortgage! Refinancing has a number of benefits that can make it worth the initial cost a few times over.
Benefits
When you refinance, you could be able to lower the interest rate and mortgage payment amount, perhaps significantly. You may also have the ability to "cash out" a portion of the built-up equity in your residence, which you are able use to take care of higher interest debts, make home improvements, or plan a vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to build your equity quicker.
Expenses and Fees
Of course, you'll have to pay for your the refinance process. You'll have the same kinds of fees as with your present home loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might need to pay points (prepaid interest) to attain a better rate of interest. If you pay (on average) three percent of the loan amount up front, your savings for the life of the new loan can be substantial. You might hear that the points can be tax deductible, but since tax regulations can be ever-changing, we urge you to consult your tax professional before considering this in your calculations.
An additional cost that borrowers might take into account is that a lower interest rate will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 4056158543.
All things considered, for most borrowers the total of up-front costs to refinance are paid back soon in savings each month. We'll help you determine which mortgage program is perfect for you, taking into account 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 4056158543 to get you started.
Want to know more about refinancing? Give us a call at 4056158543.