Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least 2 points lower, should you refinance your loan. That may have been valid a while back, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new loan! Refinancing has a number of benefits that often make it worth the up-front cost a few times over.
Advantages of Refinancing
When you refinance, you might have the ability to lower the interest rate and monthly mortgage payment , perhaps significantly. Additionally, you may have the option of tapping into the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build up your equity faster.
All of these advantages do come with some expense, though. You will be charged the same sort of fees as you did with your present mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might investigate paying points to reduce your interest rate. The amount you will save on the life of the mortgage might be significant if you have paid up front about three percent of the new loan total. We recommend that you consult with a tax professional before acting on hear-say that any paid points can be deducted on your taxes.
An additional cost that a borrower may take into account is that a lower interest rate will reduce the interest amount you'll be able to deduct from your federal income taxes. Call us at (909) 467-1090 to help you do the math.
Ultimately, for most borrowers the amount of initial costs to refinance will be paid back very quickly in monthly savings. We can help you figure out your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at (909) 467-1090 to get started.