When is Refinancing Worth it?
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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least two points lower than your existing rate? That could have been valid years ago, but since refinancing has been costing less recently, it's a good time to consider a new mortgage! A refinanced mortgage loan can be worth its cost many times over, factoring in the benefits that it brings, as well as a lower interest rate.
When you refinance, you may be able to reduce the interest rate and monthly mortgage payment amount, perhaps considerably. You could also have the ability to "cash out" some of the built-up equity in your home, which you can use to take care of higher interest debts, add on to your home, or take a vacation. With lower rates, you might also get the chance to build up home equity faster by changing to a shorter term mortgage.
Fees and Expenses
All of these benefits do cost something, though. You will be charged the same types of fees as with your present mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might think about paying points to be given a better interest rate. The amount you will save on the life of the mortgage loan may be significant if you've paid up front about three percent of the new loan total. You might hear that these points may be tax deductible, but because tax regulations are difficult to keep up with, please speak with a tax professional before depending on this.
One more cost that a borrower might consider is that a lower rate of interest will reduce the interest amount you will deduct on your federal income taxes. Call us at 4152449383 to help you do the math.
In the end, for most borrowers the total of initial costs to refinance are paid back very quickly in monthly savings. We'll help you determine what mortgage program is the best fit for you, considering your cash on hand, the likelihood of selling your house in the next few years, and how refinancing might effect your taxes. Call us at 4152449383 to get you started.
Curious about refinancing? Call us: 4152449383.