Is Refinancing Worth the Cost?
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Shopping for a mortgage? We will be glad to assist you! Call us at 9043423622. Ready to get started? Apply Now.
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Ever hear the old rule of thumb that says you should only consider refinancing if your new interest rate will be at least 2 points under your current rate? Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be time to take a serious look. Refinancing your mortgage has various advantages that can make it worth the up-front cost a few times over.
Advantages of Refinancing
You might be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced loan. You could also have the ability to "cash out" a portion of your home equity, which you will be able use to take care of higher interest debts, improve your home, or take a vacation. With lower interest rates, you may also be able to build up home equity faster by switching to a shorter term mortgage.
The Cost
As you probably expect, you'll have some fees and expenses during the the refinance process. When you refinance, you're paying for many of the same things you paid for during your original mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
You might consider paying points to reduce your interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, your savings for the life of the refinanced mortgage loan can be great. We recommend that you consult with a tax professional before acting on advice that these paid points can be deducted on your federal income taxes.
One more cost that a borrower may consider is that a lower interest rate will lower the interest amount you'll deduct on your federal income taxes. Call us at 9043423622 to help you do the math.
All things considered, for most borrowers the amount of initial costs to refinance will be paid back soon in monthly savings. We'll help you figure out which mortgage loan program is the ideal fit for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at 9043423622 to get started.
Want to know more about refinancing? Give us a call at 9043423622.