Weighing the Options of Refinancing
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Some have said that only when your new interest is at least two points lower, should you refinance your loan. Perhaps several years ago that was sage advice, but as refinance costs have been getting lower, it could be time to take a serious look. A refinance is often worth its cost several times over, because of the advantages that may come, along with a lower interest rate.
Advantages of Refinancing
When you refinance, you might have the ability to lower your interest rate and monthly payment , sometimes significantly. You also might be given the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You could be able to refinance to a shorter-term mortgage loan, enabling you to build your equity faster.
Fees and Expenses
Of course, you will have to pay for your the refinance process. With your refinance, you're paying for basically the same things you paid for during your original mortgage loan. These may include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might need to pay discount points (prepaid interest) to attain a lower rate of interest. When you pay (on average) three percent of the loan amount initially, your savings for the term of the refinanced loan can be significant. You might have heard that the points can be deducted on your income taxes, but because tax regulations can be ever-changing, please consult a tax professional before considering this in your calculations.
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 from your taxes. Call us at 754-202-4376 to help you do the math.
Most borrowers find that the savings each month quickly outweigh the up-front cost of refinancing. We will work with you to find out what loan program is ideal for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing can effect your taxes. Call us at 754-202-4376 to get you started.
Want to know more about refinancing your home? Call us: 754-202-4376.