When is Refinancing Worth it?
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In the market for a mortgage? We can help! Give us a call at 4104614043. Ready to begin? Apply Online Now.
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Some have said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was sage advice, but since refinance costs have been falling recently, it may be time to look into it. A refinance may be worth its cost several times over, because of the benefits that may come, as well as a lower interest rate.
Benefits
When you refinance, you might have the ability to reduce the interest rate and monthly payment , perhaps by a lot. You might also have the option to "cash out" some of your equity, which you may use to consolidate debts, improve your home, or finance a vacation. You may be able to refinance into a shorter-term mortgage loan, enabling you to build up your home equity quicker.
Expenses and Fees
All of these benefits do cost something, though. You will have to pay the same types of fees as you did with your present mortgage. These can include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
You might need to pay discount points (prepaid interest) to get a more favorable interest rate. The money you will save over the life of the mortgage may be significant if you have paid up front about 3% of the new loan balance. Please talk to a tax professional before acting on hear-say that the paid points can be deducted on your taxes.
Speaking of taxes, once you bring down your interest rate, naturally you will also be lowering the interest amount that you'll be able to deduct from your taxes. This is one more cost that some borrowers consider. We can help you do the math! Call us at 4104614043.
Most borrowers find that the savings per month outweigh the up-front expenses of a refinance. We can help you explore what your options are, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at 4104614043 to get started.
Want to know more about refinancing your home? Give us a call at 4104614043.