Weighing the Options of Refinancing
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It has been said that only if your new interest is at least 2 points under your current rate, should you refinance your loan. Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it may be time to take a serious look. A refinanced mortgage loan is often worth its cost several times over, because of the advantages that can come, in addition to a reduced interest rate.
When you refinance, you could have the ability to lower the interest rate and mortgage payment , perhaps by a lot. You also might have the option of tapping into the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You may be able to refinance into a shorter-term mortgage program, enabling you to build your equity faster.
All of these advantages do cost something, though. With your refinance, you're paying for basically the same things you paid for at the time you got your current mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying points can get you a better interest rate. Your savings on the life of the mortgage might be substantial if you have paid up front about three percent of the new loan total. Please consult with a tax professional before acting on hear-say that any points paid can be deducted on your federal income taxes.
Another thing about taxes is that when you bring down your interest rate, of course you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers consider. Call us at (909) 467-1090 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the up-front expenses of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at (909) 467-1090 to get you started.