Weighing the Options of Refinancing

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Ever hear the old rule of thumb that states you should only consider refinancing if the new interest rate will be at least 2 points lower than your present rate? Maybe that was good advice several years ago, but as refinance costs have been getting lower, it could be a good time to look into it. A refinance may be worth its cost many times over, considering the benefits that come, as well as a reduced interest rate.

Advantages

You might be able to lower your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with a refinanced mortgage. You could also be able to "cash out" a portion of your equity, which you may use to consolidate debts, make home improvements, or plan a vacation. With lower rates, you might also be able to build your home equity more quickly by changing to a shorter-term mortgage.

Expenses and Fees

All these benefits do cost something, though. You will have to pay the same types of expenses and fees as with your present mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can result in a better interest rate. Your savings over the life of the mortgage might be substantial if you've paid up front about three percent of the new loan total. You may hear that the points can be tax deductible, but since tax regulations are ever-changing, we urge you to consult a tax professional before depending on this.

Another thing about taxes is that once your interest rate is reduced, of course you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at 9043423622.

All things considered, for most borrowers the amount of initial costs to refinance are made up very quickly in savings each month. We will work with you to determine what mortgage program is perfect for you, looking at your cash on hand, how likely you are to sell your house in the near future, and how refinancing will effect your taxes. Call us at 9043423622 to get you started.

Curious about refinancing your home? Give us a call: 9043423622.

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