Weighing the Options of Refinancing
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It has been said that only if your new interest is at least two points lower, should you refinance your mortgage. That could have been true years ago, but with refinancing dropping in cost over the last few years, it is a good time to consider a new loan! Refinancing your mortgage loan has a number of advantages that often make it worth the up-front cost a few times over.
Benefits
You could be able to bring down your interest rate (sometimes significantly) and have smaller monthly payments with a refinanced mortgage loan. Additionally, you may be given the option of pulling out some of your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With reduced rates, you might also be able to build your home equity faster by moving to a shorter-term loan.
The Cost
Of course, you will have some fees and expenses during the process of refinancing. You will have to pay the same types of expenses and fees as you did with your current home loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can get you a better interest rate. If you pay (on average) three percent of the mortgage loan amount initially, the savings for the life of the refinanced mortgage can be significant. You may have heard that these points can be tax deductible, but as tax regulations can be ever-changing, please consult your tax professional before making any decisions based on this.
Another thing about taxes is that once your interest rate is reduced, of course you'll also be lowering the interest amount that you may deduct on your taxes. This is another cost that some borrowers take into consideration. We can help you do the math! Call us at 5626935048.
In the end, for most people the total of up-front costs to refinance will be paid back very quickly in savings each month. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 5626935048 to get started.
Curious about refinancing your home? Give us a call at 5626935048.