Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only refinance if the new interest rate will be at least 2 points lower than your existing one? That might have been valid a while back, 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! A refinanced loan can be worth its cost several times over, factoring in the advantages that may come, along with a reduced interest rate.
Benefits from Refinancing
When you refinance, you may be able to lower the interest rate and monthly mortgage payment , sometimes considerably. You might also have the ability to "cash out" some of your home equity, which you may use to take care of higher interest debts, add on to your home, or plan a vacation. You could be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your equity faster.
Fees and Expenses
All of these benefits do come with some expense, though. With your refinance, you're paying for most of the same things you paid for when you obtained your existing mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might look into paying points to get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount up front, your savings for the life of the refinanced mortgage loan can be substantial. You might be told that the points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, please speak with your tax professional before depending on this.
Another thing about taxes is that when your interest rate is reduced, naturally you will also be lowering the paid interest amount that you will be able to deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at 5626935048.
In the end, for most people the total of initial costs to refinance are made up soon in monthly savings. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 5626935048 to get started.
Want to know more about refinancing your home? Give us a call: 5626935048.