When is Refinancing Worth it?
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Searching for mortgage advice? We can assist you! Call us at 3217777277. Want to get started? Apply Here.
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Ever heard the pearl of wisdom that states you should only refinance if the new interest rate is at least two points lower than your current rate? That might have been sound advice a while back, but with refinancing dropping in cost in recent years, it's a good time to consider a new mortgage! Refinancing your mortgage has a number of advantages that can make it worth the initial cost a few times over.
Benefits
You could be able to lower your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced mortgage loan. You might also have the option to "cash out" some of your equity, which you may use to consolidate debts, make home improvements, or plan a vacation. You might be able to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity quicker.
The Cost
Of course, you will have to pay for your the refinance process. You will have to pay the same kinds of expenses and fees as you did with your current mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can get you a lower interest rate. Your savings on the life of the mortgage loan could be significant if you have paid up front about 3% of the new loan total. Please consult with a tax professional before acting on hear-say that the paid points can be deducted on your taxes.
Another thing about taxes is that when you bring down your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is one more expense that some borrowers take into consideration. Call us at 3217777277 to help you do the math.
Most borrowers find that the savings per month balance out the initial expenses of a refinance. We'll help you determine what loan program is ideal for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing may have on your taxes. Call us at 3217777277 to get you started.
Want to know more about refinancing your home? Call us: 3217777277.