Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least 2 points under your current one? That could have been valid years ago, but since refinancing has been costing less recently, it's never the wrong time to explore the options of a new mortgage loan! A refinance is often worth its cost many times over, considering the advantages that it brings, as well as a lower interest rate.
Advantages
You may be able to bring down your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced loan. You might also have the option to "cash out" some of your home equity, that you will be able use to take care of higher interest debts, make home improvements, or finance a vacation. You may be able to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.
Fees and Expenses
Of course, you will have some fees and expenses during the process of refinancing. With your refinance, you're paying for most of the same things you were charged for during your original mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might consider paying points to receive a reduced interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the term of the refinanced loan can be great. Please talk to a tax professional before acting on hear-say that the paid points may be deducted on your federal income taxes.
Another expense that borrowers may consider is that a lower rate of interest will reduce the interest amount you will be able to deduct from your federal income taxes. Call us at 754-202-4376 to help you do the math.
Ultimately, for most people the amount of initial costs to refinance are made up soon in savings each month. We can help you explore what your options are, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 754-202-4376 to get you started.
Curious about refinancing your home? Call us: 754-202-4376.