Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We'd be thrilled to discuss our mortgage offerings! Call us at 9043423622. Ready to get started? Apply Now.
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Ever hear the old rule of thumb that states you should only refinance if the new interest rate is at least two points lower than your current rate? That might have been accurate a while back, but with refinancing dropping in cost in recent years, it's a good time to explore the options of a new loan! Refinancing your mortgage loan has a number of advantages that will often make it worth the up-front cost several times over.
Advantages
You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced loan. You could also be able to "cash out" a portion of the built-up equity in your residence, which you can use to consolidate debts, add on to your home, or finance a vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by moving to a shorter-term mortgage loan.
The Cost
All these advantages do come with some expense, though. You will have to pay the same sort of expenses and fees as you did with your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could offer to pay points (prepaid interest) to gain a lower interest rate. If you pay (on average) three percent of the mortgage loan amount initially, the savings for the term of the refinanced mortgage can be significant. We recommend that you consult with a tax professional before acting on rumors that the paid points may be deducted on your taxes.
Speaking of taxes, once your interest rate is reduced, of course you'll also be reducing the interest amount that you may deduct from your taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at 9043423622.
In the end, for most people the total of up-front costs to refinance are made up soon in savings each month. We will work with you to find out what mortgage 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 may effect your taxes. Call us at 9043423622 to get you started.
Want to know more about refinancing? Call us: 9043423622.