When is Refinancing Worth it?
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In the market for a new mortgage loan? We can help! Call us at 4104614043. Ready to begin? Apply Here.
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Ever hear the pearl of wisdom that says you should only consider refinancing if your new interest rate is at least two points under your present rate? Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it could be time to look into it. Refinancing your mortgage loan has a number of advantages that will often make it worth the initial cost several times over.
Advantages of Refinancing
When you refinance, you could be able to lower your interest rate and monthly payment , perhaps by a lot. You could also have the option to "cash out" a portion of your home equity, which you are able use to take care of higher interest debts, improve your home, or plan a vacation. You may be able to refinance to a shorter-term mortgage loan, enabling you to build up your equity quicker.
Fees and Expenses
All these advantages do cost something, though. With your refinance, you're paying for a lot of the same things you paid for when you got your current mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying discount points can help you get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the life of the new mortgage loan can be significant. You may have heard that the points can be deducted on your income taxes, but since tax regulations are ever-changing, we urge you to consult with your tax professional before making decisions based on this.
Another thing about taxes is that if your interest rate is reduced, it follows that you'll also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at 4104614043.
Most people find that the savings each month balance out the up-front cost of a refinance. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 4104614043 to get started.
Want to know more about refinancing your home? Call us: 4104614043.