Is Refinancing Worth the Cost?
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It has been said that only when your new interest is at least two points lower, should you refinance your loan. That might have been true years ago, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to think about a new mortgage! A refinanced mortgage loan is often worth its cost many times over, factoring in the benefits that come, along with a lower interest rate.
Advantages
When you refinance, you might be able to reduce the interest rate and monthly mortgage payment amount, sometimes considerably. You also might have the option of pulling out some of the equity in your house by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build your home equity faster by changing to a shorter term loan.
The Cost
All these benefits do come with some expense, though. You'll have to pay the same sort of expenses and fees as you did with your existing home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might offer to pay points (prepaid interest) to attain a more favorable rate of interest. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the new loan can be significant. Please consult with a tax professional before acting on hear-say that these points paid may be deducted on your federal income taxes.
Another thing about taxes is that once your interest rate is lowered, of course you will also be lowering the interest amount that you'll be able to deduct on your taxes. This is one more expense that borrowers take into consideration. Call us at 3032282254 to help you do the math.
Ultimately, for most people the amount of initial costs to refinance are made up very quickly 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 next couple of years, and your cash on hand. Call us at 3032282254 to get started.
Want to know more about refinancing your home? Call us: 3032282254.