Weighing the Options of Refinancing
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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points below your present rate? Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing has a variety of advantages that will often make it worth the initial cost many times over.
Benefits
When you refinance, you could be able to reduce the interest rate and mortgage payment , perhaps by a lot. You might also have the option to "cash out" a portion of your equity, that you are able use to consolidate debt, improve your home, or take a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to build your equity faster.
The Cost
All of these advantages do come with some expense, though. When you refinance, you're paying for a lot of the same things you were charged for during your current mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You could need to pay points (prepaid interest) to gain a better interest rate. Your savings on the life of the mortgage loan could be significant if you've paid up front about three percent of the new loan balance. We recommend that you talk to a tax professional before acting on hear-say that the paid points can be deducted on your taxes.
Another thing about taxes is that once your interest rate is reduced, it follows that you'll also be reducing the interest amount that you may deduct from your taxes. This is another expense that borrowers consider. We can help you do the math! Call us at 5626935048.
Most borrowers find that the savings each month quickly outweigh the up-front cost of a refinance. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at 5626935048 to get started.
Curious about refinancing your home? Call us at 5626935048.