Is Refinancing Worth the Cost?
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In the market for a new mortgage? We will be glad to help! Give us a call at 754-202-4376. Ready to get started? Apply Now.
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It has been said that only when your new interest will be at least two points below your current rate, should you refinance your mortgage. That could have been accurate a while back, but since refinancing has been costing less recently, it is a good time to explore the options of a new mortgage! A refinance is often worth its cost several times over, factoring in the advantages that it brings, in addition to a reduced interest rate.
Advantages of Refinancing
You may be able to lower your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage loan. You also might have the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build up home equity more quickly by moving to a shorter term mortgage loan.
Expenses and Fees
All these benefits do cost something, though. When you refinance, you're paying for basically the same things you were charged for at the time you obtained your current mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could offer to pay discount points (prepaid interest) to attain a lower rate of interest. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the life of the new mortgage can be great. Please consult a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
One more expense that a borrower might consider is that a lower 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.
Ultimately, for most the total of up-front costs to refinance are paid back very quickly in monthly savings. We will help you figure out what mortgage loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing will effect your taxes. Call us at 754-202-4376 to get started.
Curious about refinancing? Give us a call at 754-202-4376.