When is Refinancing Worth it?

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Ever hear the old rule of thumb that states you should only refinance if the new interest rate will be at least 2 points below your current rate? That might have been good advice years ago, but with refinancing dropping in cost over the last few years, it's never the wrong time to explore the options of a new mortgage loan! A refinance may be worth its cost many times over, factoring in the benefits that may come, along with a lower interest rate.

Benefits from Refinancing

You could be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage. You could also have the ability to "cash out" a portion of your equity, that you are able use to consolidate debts, make home improvements, or plan a vacation. You may have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.

Fees and Expenses

All these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you were charged for during your original mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might need to pay discount points (prepaid interest) to attain a more favorable interest rate. If you pay (on average) three percent of the loan amount at the start, your savings for the term of the refinanced loan can be great. You might be told that points may be tax deductible, but since tax regulations are ever-changing, we urge you to speak with your tax professional before making decisions based on this.

One more cost that borrowers might take into account is that a lower rate of interest will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at 9043423622.

Most people find that the monthly savings outweigh the up-front cost of a refinance. We can help you find out what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 9043423622 to get started.

Want to know more about refinancing? Give us a call: 9043423622.

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159 Hampton Point Drive Suite 4
St. Augustine, FL 32092