Weighing the Options of Refinancing

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Ever hear the old rule of thumb that says you should only consider refinancing if the new interest rate is at least 2 points under your existing rate? Maybe that was good advice several years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan is often worth its cost many times over, considering the advantages that it brings, as well as a reduced interest rate.

Advantages

When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment , sometimes considerably. You also might have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage loan, giving you the ability to build your equity faster.

The Cost

Of course, you'll have some fees and expenses during your process of refinancing. You'll have the same kinds of expenses and fees as with your existing mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might investigate paying points to be given a better interest rate. Your savings on the life of the mortgage might be substantial if you have paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.

An additional cost that borrowers may consider is that a lower interest rate will reduce the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at (415) 244-9383.

Most people find that the savings per month outweigh the initial expenses of a refinance. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at (415) 244-9383 to get started.

Want to know more about refinancing your home? Call us: (415) 244-9383.

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