Is Refinancing Worth the Cost?
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In the market for a mortgage? We can help! Give us a call today at 3217777277. Ready to begin? Apply Now.
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Ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least two points under your current one? Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it may be time to look into it. A refinanced mortgage is often worth its cost several times over, considering the benefits that can come, in addition to a reduced interest rate.
Advantages of Refinancing
When you refinance, you might be able to reduce the interest rate and monthly payment , perhaps significantly. You could also have the option to "cash out" some of the built-up equity in your residence, which you are able use to take care of higher interest debt, make home improvements, or finance a vacation. With lower rates, you might also get the chance to build up home equity more quickly by moving to a shorter term mortgage loan.
Expenses and Fees
All of these benefits do cost something, though. You will pay the same types of expenses and fees as with your existing mortgage loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying points can result in a lower interest rate. If you pay (on average) 3% of the mortgage loan amount initially, the savings for the term of the refinanced mortgage loan can be substantial. We recommend that you consult with a tax professional before acting on rumors that these points paid can be deducted on your taxes.
Another thing about taxes is that once you bring down your interest rate, naturally you'll also be lowering the paid interest amount that you may deduct from your taxes. This is one more expense that some borrowers take into consideration. We can help you do the math! Call us at 3217777277.
Most borrowers find that the savings each month outweigh the initial expenses of refinancing. We'll work with you to find out which mortgage loan program is ideal for you, considering your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing will probably have on your taxes. Call us at 3217777277 to get started.
Want to know more about refinancing? Call us at 3217777277.