Weighing the Options of Refinancing
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Some have said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. That may have been true a while back, but with refinancing dropping in cost recently, it's a good time to consider a new mortgage! Refinancing your mortgage has some advantages that often make it worth the up-front cost many times over.
Advantages
When you refinance, you could have the ability to lower the interest rate and mortgage payment , perhaps by a lot. You may also have the ability to "cash out" some of your equity, which you may use to take care of higher interest debts, make home improvements, or plan a vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build your equity quicker.
The Cost
All these advantages do cost something, though. When you refinance, you are paying for a lot of the same things you paid for when you obtained your original mortgage loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
You could offer to pay points (prepaid interest) to attain a better rate of interest. The money you'll save on the life of the mortgage might be significant if you have paid up front about 3% of the new loan total. Please consult with a tax professional before acting on advice that any paid points can be deducted on your federal income taxes.
One more expense that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at 754-202-4376.
All things considered, for most borrowers the total of initial costs to refinance are paid back very quickly in savings each month. We will help you find out what mortgage loan program is best for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and how refinancing will effect your taxes. Call us at 754-202-4376 to get you started.
Curious about refinancing? Call us: 754-202-4376.