Weighing the Options of Refinancing
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Some have said that only when your new interest will be at least two points lower, should you refinance your mortgage. That could have been good advice years ago, but as refinancing has been costing less recently, it's a good time to explore the options of a new mortgage loan! A refinanced mortgage loan is often worth its cost many times over, factoring in the benefits that can come, along with a reduced interest rate.
Advantages of Refinancing
When you refinance, you might have the ability to lower the interest rate and mortgage payment amount, sometimes by a lot. You could also have the option to "cash out" a portion of your home equity, which you may use to consolidate debt, improve your home, or plan a vacation. You could be able to refinance to a shorter-term mortgage program, giving you the ability to build up your home equity quicker.
Expenses and Fees
As you probably know, you'll have to pay for the process of refinancing. You will have to pay the same kinds of expenses and fees as you did with your current mortgage. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could offer to pay discount points (prepaid interest) to get a more favorable rate of interest. When you pay (on average) 3% of the loan amount initially, your savings for the term of the refinanced mortgage loan can be substantial. Please talk to a tax professional before acting on hear-say that any points paid may be deducted on your federal income taxes.
Another thing about taxes is that if your interest rate is reduced, of course you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers consider. We can help you do the math! Call us at 9094671090.
In the end, for most people the amount of initial costs to refinance will be paid back very quickly in monthly savings. We can help you find out 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 cash on hand. Call us at 9094671090 to get you started.
Curious about refinancing? Give us a call at 9094671090.