When is Refinancing Worth it?

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Ever heard the old rule of thumb that says you should only refinance if your new interest rate is at least two points below your current rate? That could have been sound advice a while back, but with refinancing dropping in cost in recent years, it's a good time to explore the options of a new mortgage! Refinancing has various advantages that often make it worth the up-front cost many times over.

Advantages of Refinancing

You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with your refinanced mortgage. You also could have the option of tapping into your home equity by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to add to your home equity quicker.

Fees and Expenses

As you probably know, you'll have some fees and expenses during the process of refinancing. You will have to pay the same sort of fees as with your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might think about paying points to receive a lower interest rate. Your savings on the life of the mortgage might be substantial if you have paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on advice that these paid points can be deducted on your federal income taxes.

Another cost that a borrower might consider is that a reduced rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 4152449383.

All things considered, for most people the total of up-front costs to refinance are made up soon in monthly savings. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 4152449383 to get you started.

Curious about refinancing? Call us: 4152449383.

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Dick Lepre NMLS #302379

LendUS, LLC dba RPM Mortgage - NMLS ID #1938

3240 Stone Valley Road West
Alamo, CA 94507