Weighing the Options of Refinancing
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It has been said that only if your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it could be a good time to take a serious look. A refinance can be worth its cost several times over, because of the advantages that may come, as well as a lower interest rate.
When you refinance, you might have the ability to lower your interest rate and mortgage payment amount, sometimes by a lot. You also may 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 rates, you may also get the chance to build up home equity faster by changing to a shorter-term mortgage loan.
Fees and Expenses
As you probably expect, you'll have to pay for the process of refinancing. With your refinance, you are paying for most of the same things you paid for at the time you obtained your original mortgage loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to be given a better interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the refinanced mortgage can be substantial. We recommend that you consult a tax professional before acting on hear-say that any paid points may be deducted on your federal income taxes.
Another expense that borrowers may consider is that a reduced interest rate will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at (415) 244-9383.
Most people find that the monthly savings quickly outweigh the initial cost of a refinance. We will work with you to figure out what loan program is best for you, looking at your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing may have on your taxes. Call us at (415) 244-9383 to get started.
Curious about refinancing your home? Call us at (415) 244-9383.