Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least 2 points below your current rate, should you refinance your loan. Maybe that was good advice several years ago, but as refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing your mortgage has a number of advantages that will often make it worth the initial cost several times over.
Advantages
You might be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage. You might also have the ability to "cash out" a portion of your equity, that you will be able use to consolidate debts, add on to your home, or finance a vacation. With reduced rates, you may also get the chance to build up home equity faster by moving to a shorter-term mortgage.
Fees and Expenses
Of course, you will have some fees and expenses during your the refinance process. When you refinance, you are paying for a lot of the same things you were charged for during your current mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying discount points can get you a better interest rate. Your savings over the life of the mortgage loan might be substantial if you have paid up front about 3% of the new loan total. You may be told that these points may be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to consult your tax professional before considering this in your calculations.
Another thing about taxes is that when your interest rate is lowered, naturally you will also be lowering the interest amount that you may deduct on your federal income taxes. This is another cost that some borrowers consider. Call us at 5122916100 to help you do the math.
All things considered, for most people the amount of up-front costs to refinance are paid back very quickly in monthly savings. We'll work with you to determine what mortgage loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and how refinancing could effect your taxes. Call us at 5122916100 to get you started.
Want to know more about refinancing your home? Call us: 5122916100.