Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We will be glad to help! Give us a call today at 4056158543. Ready to get started? Apply Now.
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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least two points below your present rate? That may have been valid a while back, but as refinancing has been costing less recently, it is never the wrong time to explore the options of a new loan! Refinancing has a variety of advantages that often make it worth the initial cost several times over.
Advantages of Refinancing
You might be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. You could also have the option to "cash out" some of your home equity, that you may use to consolidate debts, make home improvements, or finance a vacation. With reduced rates, you may also get the chance to build your home equity more quickly by changing to a shorter term mortgage loan.
Expenses and Fees
Of course, you will have some fees and expenses during the the refinance process. You'll have to pay the same types of expenses and fees as with your existing mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could offer to pay discount points (prepaid interest) to gain a better interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, your savings for the life of the refinanced mortgage can be significant. Please talk to a tax professional before acting on advice that any points paid can be deducted on your taxes.
An additional expense that a borrower might consider is that a reduced interest rate will reduce the interest amount you'll be able to deduct from your federal income taxes. Call us at 4056158543 to help you do the math.
All things considered, for most borrowers the amount of up-front costs to refinance will be paid back soon in savings each month. We will work with you to find out what loan program is best for you, considering your cash on hand, the likelihood of selling your house in the next few years, and what effect refinancing will have on your taxes. Call us at 4056158543 to get started.
Want to know more about refinancing your home? Call us: 4056158543.