Is Refinancing Worth the Cost?

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Ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least two points under your existing rate? Perhaps that was sound advice several years ago, but as refinance costs have been falling recently, it could be time to look into it. A refinance can be worth its cost many times over, because of the benefits that it brings, along with a lower interest rate.

Advantages of Refinancing

You might be able to bring down your interest rate (sometimes substantially) and have smaller monthly payments with your refinanced mortgage. You also may have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also be able to build your home equity more quickly by changing to a shorter-term mortgage.

The Cost

As you probably know, you'll have some fees and expenses during the process of refinancing. You'll be charged the same kinds of fees as with your current mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Do the Math

You might consider paying points to get a reduced interest rate. If you pay (on average) three percent of the loan amount at the start, the savings for the term of the new mortgage loan can be significant. Please consult with a tax professional before acting on hear-say that these paid points can be deducted on your federal income taxes.

An additional expense that a borrower may consider is that a lower rate of interest will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at 4056158543 to help you do the math.

Most people find that the monthly savings quickly balance out the initial expenses of refinancing. We will help you determine what mortgage loan program is best for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and how refinancing might effect your taxes. Call us at 4056158543 to get started.

Want to know more about refinancing? Give us a call: 4056158543.

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Executive Lending Group

A Division of 1st Capital Mortgage LLC

2401 Tee Circle, STE 102B
Norman, OK 73069