Weighing the Options of Refinancing
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Are you looking for a new mortgage? We will be glad to help! Give us a call today at 754-202-4376. Ready to get started? Apply Now.
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least 2 points lower than your existing one? That may have been true years ago, but with refinancing dropping in cost recently, it's never the wrong time to consider a new loan! Refinancing your loan has various benefits that often make it worth the up-front cost a few times over.
Benefits
You might be able to bring down your interest rate (sometimes substantially) and make smaller mortgage payments with your refinanced mortgage loan. You may also be able to "cash out" a portion of the built-up equity in your residence, which you may use to consolidate debt, make home improvements, or plan a vacation. You could be able to refinance to a shorter-term mortgage program, enabling you to build your equity quicker.
Expenses and Fees
All these benefits do cost something, though. You will pay the same types of fees as you did with your current home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying points can result in a better interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, the savings for the life of the refinanced loan can be significant. Please consult with a tax professional before acting on rumors that the points paid can be deducted on your taxes.
Another thing about taxes is that when you lower your interest rate, of course you will also be reducing the interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers take into account. Call us at 754-202-4376 to help you do the math.
In the end, for most people the amount of initial costs to refinance are made up soon in savings each month. We will help you determine which mortgage program is best for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing may have on your taxes. Call us at 754-202-4376 to get started.
Curious about refinancing your home? Give us a call: 754-202-4376.