Is Refinancing Worth the Cost?

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Ever heard the old rule of thumb that says you should only refinance if your new interest rate will be at least two points lower than your existing rate? Perhaps that was good advice a number of years ago, 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, factoring in the advantages that it brings, as well as a reduced interest rate.

Benefits

When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment , sometimes considerably. You may also have the ability to "cash out" a portion of your equity, that you are able use to consolidate debts, add on to your home, or plan a vacation. With reduced rates, you might also be able to build your home equity more quickly by switching to a shorter term mortgage loan.

Fees and Expenses

All these advantages do come with some expense, though. When you refinance, you're paying for most of the same things you paid for when you obtained your original mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying discount points can get you a lower interest rate. The amount you will save over the life of the mortgage might be significant if you've paid up front about three percent of the new loan total. You may hear that points may be deducted on your income taxes, but because tax regulations are difficult to keep up with, please consult with your tax professional before considering this in your calculations.

Another expense that borrowers might take into account is that a lower interest rate will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at 3217777277.

Most people find that the savings each month quickly outweigh the initial expenses of a refinance. We will help you find out which mortgage loan program is best for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing may effect your taxes. Call us at 3217777277 to get started.

Want to know more about refinancing? Give us a call at 3217777277.

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