When is Refinancing Worth it?
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It has been said that only in the case your new interest will be at least two points lower, should you refinance your loan. That may have been true 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 refinanced loan may be worth its cost several times over, factoring in the advantages that may come, in addition to a lower interest rate.
You might be able to lower your interest rate (sometimes by a lot) and have smaller monthly payments with a refinanced mortgage loan. You also might have the option of pulling out some of the equity in your home by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also be able to build up home equity faster by moving to a shorter-term loan.
Fees and Expenses
As you probably know, you'll have some fees and expenses during the the refinance process. When you refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can help you attain a better interest rate. If you pay (on average) 3% of the loan amount at the start, your savings for the life of the refinanced loan can be significant. You might be told that the points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, please consult with a tax professional before considering this in your calculations.
Another thing about taxes is that when your interest rate is lowered, of course you will also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at (800) 288-9693.
All things considered, for most the amount of initial costs to refinance are made up very quickly in monthly savings. 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 near future, and your available cash. Call us at (800) 288-9693 to get started.
Want to know more about refinancing your home? Call us: (800) 288-9693.