Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We can assist you! Call us at 3032282254. Want to get started? Apply Here.
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Ever hear the pearl of wisdom that says you should only refinance if the new interest rate is at least two points lower than your present one? Perhaps that was sound advice a number of years ago, but since refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing your mortgage loan has a number of benefits that will often make it worth the initial expenditure several times over.
Advantages
When you refinance, you might be able to lower your interest rate and mortgage payment amount, sometimes significantly. You also could have the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build your home equity more quickly by moving to a shorter-term mortgage.
Expenses and Fees
Of course, you will have some fees and expenses during the process of refinancing. You will pay the same sort of expenses and fees as you did with your current mortgage loan. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might need to pay points (prepaid interest) to get a more favorable interest rate. If you pay (on average) 3% of the loan amount up front, the savings for the life of the refinanced mortgage loan can be great. We recommend that you consult with a tax professional before acting on hear-say that the paid points can be deducted on your federal income taxes.
One more expense that borrowers may consider is that a reduced interest rate will reduce the interest amount you will deduct on your taxes. Call us at 3032282254 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the up-front expenses of a refinance. We will work with you to figure out what loan program is perfect for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing might have on your taxes. Call us at 3032282254 to get started.
Want to know more about refinancing your home? Call us at 3032282254.