Is Refinancing Worth the Cost?
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Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least 2 points under your existing one? Perhaps several years ago that was good advice, but since refinance costs have been getting lower, it could be a good time to take a serious look. A refinanced mortgage loan is often worth its cost many times over, considering the benefits that may come, as well as a lower interest rate.
Advantages of Refinancing
When you refinance, you might have the ability to lower your interest rate and monthly mortgage payment amount, perhaps considerably. You could also be able to "cash out" some of the built-up equity in your residence, that you are able use to take care of higher interest debt, improve your home, or plan a vacation. With reduced interest rates, you might also get the chance to build up home equity faster by moving to a shorter-term loan.
Expenses and Fees
All these benefits do cost something, though. You will pay the same kinds of expenses and fees as you did with your present mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can help you attain a lower interest rate. Your savings on the life of the mortgage may be significant if you've paid up front about 3% of the new loan total. You may have heard that points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please consult your tax professional before depending on this.
Another thing about taxes is that when you reduce your interest rate, it follows that you'll also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is another cost that borrowers consider. Call us at 4056158543 to help you do the math.
Most people find that the monthly savings balance out the initial expenses of refinancing. We'll help you figure out which mortgage loan program is best for you, considering your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing might have on your taxes. Call us at 4056158543 to get started.
Curious about refinancing? Give us a call: 4056158543.