When is Refinancing Worth it?

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It has been said that only when your new interest is at least two points lower, should you refinance your loan. That may have been valid years ago, but as refinancing has been costing less recently, it's a good time to explore the options of a new mortgage loan! A refinanced mortgage loan may be worth its cost several times over, because of the benefits that it brings, in addition to a lower interest rate.

Advantages of Refinancing

You might be able to lower your interest rate (sometimes by a lot) and have smaller monthly payments with a refinanced mortgage. You might also be able to "cash out" a portion of the built-up equity in your residence, which you will be able use to take care of higher interest debt, add on to your home, or take a vacation. You could have the option to refinance to a shorter-term mortgage, giving you the ability to add to your equity quicker.

The Cost

All these advantages do cost something, though. You will have the same kinds of fees as with your present mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying discount points can result in a lower interest rate. If you pay (on average) three percent of the loan amount up front, the savings for the life of the new mortgage loan can be significant. Please consult a tax professional before acting on rumors that any paid points can be deducted on your taxes.

An additional expense that borrowers may consider is that a reduced interest rate will reduce the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 6233400934.

Ultimately, for most the total of up-front costs to refinance will be paid back soon in savings each month. We'll work with you to figure out what mortgage loan program is perfect for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. Call us at 6233400934 to get you started.

Curious about refinancing? Call us: 6233400934.

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