Is Refinancing Worth the Cost?
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It has been said that only if your new interest will be at least two points lower, should you refinance your loan. Maybe several years ago that was good advice, but since refinance costs have been falling recently, it may be a good time to look into it. Refinancing your mortgage has a variety of advantages that often make it worth the initial cost many times over.
Benefits
When you refinance, you could have the ability to reduce your interest rate and mortgage payment amount, perhaps by a lot. You could also have the ability to "cash out" some of your equity, that you will be able use to take care of higher interest debts, make home improvements, or finance a vacation. You could have the option to refinance to a shorter-term mortgage loan, enabling you to add to your equity quicker.
Expenses and Fees
As you probably expect, you'll have some fees and expenses during your the refinance process. When you refinance, you are paying for basically the same things you paid for when you got your original mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to reduce your interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the term of the refinanced loan can be substantial. We recommend that you consult with a tax professional before acting on rumors that the points paid can be deducted on your taxes.
Another expense that borrowers might consider is that a lower rate of interest will lower the interest amount you'll be able to deduct on your taxes. Call us at 3217777277 to help you do the math.
All things considered, for most people the total of up-front costs to refinance are made up very quickly in savings each month. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the next couple of years, and your cash on hand. Call us at 3217777277 to get started.
Curious about refinancing? Give us a call at 3217777277.