Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least 2 points lower than your present rate? Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it could be a good time to look into it. A refinance can be worth its cost many times over, factoring in the advantages that come, along with a reduced interest rate.

Benefits from Refinancing

You could be able to bring down your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced loan. You might also have the ability to "cash out" some of the built-up equity in your residence, which you are able use to consolidate debts, add on to your home, or finance a vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your equity faster.

Expenses and Fees

Of course, you'll have to pay for your the refinance process. You will have to pay the same types of expenses and fees as with your current mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might think about paying points to reduce your interest rate. The money you'll save on the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan balance. We recommend that you consult a tax professional before acting on advice that these points paid may be deducted on your taxes.

Another expense that borrowers might take into account is that a lower interest rate will lower the interest amount you'll be able to deduct from your taxes. Call us at (415) 244-9383 to help you do the math.

Most people find that the monthly savings outweigh the initial expenses of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your cash on hand. Call us at (415) 244-9383 to get started.

Curious about refinancing your home? Give us a call: (415) 244-9383.

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