Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. That might have been sound advice a while back, but with refinancing dropping in cost over the last few years, it is a good time to explore the options of a new mortgage! Refinancing your loan has various advantages that will often make it worth the up-front cost several times over.
Advantages
You may be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. Additionally, you might be given the option of pulling out some of the equity in your home by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you might also be able to build up home equity faster by moving to a shorter-term mortgage.
Expenses and Fees
All of these benefits do come with some expense, though. When you refinance, you are paying for basically the same things you were charged for when you obtained your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can get you a better interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the refinanced loan can be significant. You might have heard that the points may be deducted on your income taxes, but as tax regulations are difficult to keep up with, please speak with a tax professional before depending on this.
Speaking of taxes, if you bring down your interest rate, of course you will also be reducing the paid interest amount that you can deduct from your taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at 7272906863.
Ultimately, for most people the amount of up-front costs to refinance are paid back very quickly in savings each month. We will work with you to determine which mortgage loan program is ideal for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing might effect your taxes. Call us at 7272906863 to get started.
Want to know more about refinancing? Give us a call: 7272906863.