When is Refinancing Worth it?
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In the market for a new mortgage? We will be glad to assist you! Give us a call at 2057831113. Ready to get started? Apply Online Now.
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Some have said that only if your new interest will be at least two points under your current rate, should you refinance your mortgage. Maybe that was good advice a number of years ago, but since refinance costs have been falling recently, it may be time to look into it. Refinancing your mortgage has a number of benefits that will often make it worth the up-front cost several times over.
Benefits
When you refinance, you may have the ability to reduce your interest rate and monthly mortgage payment amount, sometimes by a lot. You may also have the ability to "cash out" some of your equity, which you may use to consolidate debts, improve your home, or finance a vacation. You might be able to refinance to a shorter-term mortgage program, giving you the ability to add to your equity faster.
The Cost
All these benefits do come with some expense, though. When you refinance, you're paying for basically the same things you were charged for during your original mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might need to pay points (prepaid interest) to gain a more favorable rate of interest. The money you'll save on the life of the mortgage may be significant if you've paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on rumors that any paid points may be deducted on your taxes.
One more cost that a borrower may take into account is that a reduced interest rate will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 2057831113.
Most borrowers find that the monthly savings quickly outweigh the initial cost of refinancing. We will work with you to determine which mortgage loan program is the right fit for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and the effect refinancing might have on your taxes. Call us at 2057831113 to get started.
Want to know more about refinancing? Give us a call at 2057831113.