When is Refinancing Worth it?
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Searching for a mortgage loan? We can assist you! Call us at 754-202-4376. Want to get started? Apply Here.
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Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least 2 points under your existing rate? Maybe several years ago that was wise advice, but since refinance costs have been falling recently, it may be a good time to take a serious look. Refinancing your mortgage has a variety of advantages that often make it worth the initial cost many times over.
Benefits
You could be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced loan. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With reduced rates, you may also get the chance to build your home equity more quickly by switching to a shorter-term mortgage loan.
Fees and Expenses
All these advantages do come with some expense, though. You'll have to pay the same types of expenses and fees as you did with your existing mortgage. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might consider paying points to be given a reduced interest rate. If you pay (on average) 3% of the mortgage loan amount up front, the savings for the life of the new mortgage can be significant. You might have heard that points may be tax deductible, but because tax regulations can be difficult to keep up with, we urge you to consult your tax professional before considering this in your calculations.
Speaking of taxes, once you reduce your interest rate, naturally you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at 754-202-4376.
Most people find that the monthly savings quickly balance out the up-front expenses of a refinance. We'll help you determine which mortgage loan program is ideal for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing will have on your taxes. Call us at 754-202-4376 to get started.
Want to know more about refinancing? Give us a call at 754-202-4376.