Is Refinancing Worth the Cost?
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Some have said that only in the case your new interest will be at least two points below your current rate, should you refinance your mortgage. That may have been true years ago, but with the fact that refinancing has been costing less in recent years, it's a good time to explore the options of a new mortgage loan! A refinance is often worth its cost several times over, considering the benefits that may come, in addition to a reduced interest rate.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced mortgage loan. You might also have the ability to "cash out" some of your equity, which you will be able use to consolidate debt, improve your home, or plan a vacation. You might be able to refinance to a shorter-term mortgage loan, enabling you to build up your equity quicker.
As you probably expect, you'll have to pay for the the refinance process. You'll have the same types of expenses and fees as with your current mortgage. These probably include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
You might think about paying points to get a better interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the life of the refinanced loan can be substantial. Please talk to a tax professional before acting on rumors that any points paid may be deducted on your federal income taxes.
Another thing about taxes is that when you bring down your interest rate, it follows that you'll also be lowering the paid interest amount that you can deduct from your taxes. This is another cost that some borrowers take into consideration. Call us at (415) 244-9383 to help you do the math.
In the end, for most people the total of initial costs to refinance will be made up soon in monthly savings. We will work with you to find out which program is perfect for you, considering your cash on hand, the likelihood of selling your home in the next few years, and how refinancing can effect your taxes. Call us at (415) 244-9383 to get started.
Curious about refinancing your home? Call us: (415) 244-9383.