Is Refinancing Worth the Cost?
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In the market for a mortgage? We will be glad to help! Call us at 9094671090. Want to get started? Apply Now.
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Ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least two points under your existing one? That might have been accurate a while back, but with refinancing dropping in cost over the last few years, it is a good time to think about a new mortgage loan! Refinancing your loan has a variety of benefits that can make it worth the up-front cost a few times over.
Advantages of Refinancing
You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced mortgage. You also might be given the option of pulling out some of your home equity by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also get the chance to build up home equity faster by moving to a shorter-term mortgage.
The Cost
Of course, you will have some fees and expenses during your the refinance process. When you refinance, you're paying for most of the same things you paid for during your original mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could need to pay points (prepaid interest) to attain a better interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the refinanced loan can be great. You might have heard that these points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, please speak with a tax professional before considering this in your calculations.
One more expense that a borrower may consider is that a reduced rate of interest will lower the interest amount you will deduct on your taxes. Call us at 9094671090 to help you do the math.
In the end, for most people the amount of up-front costs to refinance will be made up soon in savings each month. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 9094671090 to get started.
Want to know more about refinancing? Give us a call at 9094671090.