Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least 2 points under your current one? That could have been sound advice years ago, but with refinancing dropping in cost recently, it is a good time to consider a new mortgage loan! A refinance is often worth its cost several times over, factoring in the benefits that it brings, along with a lower interest rate.
When you refinance, you could have the ability to lower the interest rate and mortgage payment , sometimes by a lot. You might also be able to "cash out" some of your home equity, that you can use to take care of higher interest debts, make home improvements, or finance a vacation. You might have the option to refinance to a shorter-term mortgage loan, enabling you to add to your equity faster.
Of course, you will have to pay for the process of refinancing. With your refinance, you're paying for basically the same things you were charged for at the time you got your original mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying points can help you attain a better interest rate. When you pay (on average) three percent of the loan amount at the start, the savings for the life of the refinanced mortgage loan can be great. Please consult with a tax professional before acting on rumors that any paid points may be deducted on your federal income taxes.
One more expense that a borrower might consider is that a reduced interest rate will lower 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.
In the end, for most borrowers the total of initial costs to refinance will be made up very quickly in savings each month. We'll help you find out what loan program is perfect for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and what effect refinancing could have on your taxes. Call us at (415) 244-9383 to get started.
Curious about refinancing? Call us: (415) 244-9383.