Weighing the Options of Refinancing
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Ever hear the old rule of thumb that says you should only refinance if your new interest rate will be at least two points below your current one? That may have been true a while back, but with refinancing dropping in cost recently, it is a good time to consider a new mortgage loan! Refinancing your mortgage loan has a number of benefits that can make it worth the initial expenditure many times over.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes by a lot) and have smaller monthly payments with a refinanced loan. You may also have the ability to "cash out" some of the built-up equity in your residence, which you may use to consolidate debts, improve your home, or plan a vacation. You could have the option to refinance to a shorter-term mortgage loan, giving you the ability to build your home equity faster.
Fees and Expenses
All these advantages do cost something, though. With your refinance, you're paying for basically the same things you paid for during your original mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could offer to pay discount points (prepaid interest) to get a better rate of interest. When you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the refinanced mortgage can be significant. You may have heard that points can 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.
One more expense that borrowers may consider is that a lower interest rate will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at 623-340-0934.
Ultimately, for most the total of initial costs to refinance will be made up soon in monthly savings. We will work with you to determine which loan program is perfect for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and how refinancing can effect your taxes. Call us at 623-340-0934 to get started.
Curious about refinancing? Call us: 623-340-0934.