Weighing the Options of Refinancing
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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 loan. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to look into it. Refinancing has a variety of advantages that often make it worth the up-front expenditure a few times over.
You could be able to bring down your interest rate (sometimes by a lot) and have smaller monthly payments with a refinanced loan. Additionally, you might have the option of pulling out some of the equity in your house by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage program, giving you the ability to build your equity faster.
Expenses and Fees
Of course, you will have some fees and expenses during your process of refinancing. With your refinance, you're paying for basically the same things you were charged for when you obtained your current mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might investigate paying points to be given a better interest rate. Your savings over the life of the mortgage could be significant if you have paid up front about three percent of the new loan total. You may have heard that the points may be tax deductible, but since tax regulations are difficult to keep up with, we urge you to speak with your tax professional before making any decisions based on this.
Another cost that a borrower may consider is that a lower interest rate will reduce the interest amount you will deduct on your federal income taxes. Call us at 754-202-4376 to help you do the math.
All things considered, for most the total of initial costs to refinance will be paid back very quickly in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your cash on hand. Call us at 754-202-4376 to get you started.
Curious about refinancing? Give us a call: 754-202-4376.