Is Refinancing Worth the Cost?
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Shopping for a mortgage? We will be glad to assist you! Call us at 5852820960. Ready to get started? Apply Here.
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Some have said that only when your new interest will be at least two points below your current rate, should you refinance your loan. Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it could be time to look into it. Refinancing has various benefits that will often make it worth the up-front cost a few times over.
Benefits
You could be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage loan. You also might be given the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build your home equity faster by moving to a shorter-term loan.
Expenses and Fees
All these benefits do cost something, though. You'll have the same kinds of expenses and fees as with your current home loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay points (prepaid interest) to gain a better interest rate. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the refinanced mortgage loan can be great. We recommend that you consult with a tax professional before acting on hear-say that the points paid may be deducted on your taxes.
Another thing about taxes is that when your interest rate is reduced, of course you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is one more expense that some borrowers take into consideration. Call us at 5852820960 to help you do the math.
In the end, for most the total of initial costs to refinance will be paid back very quickly in monthly savings. We'll help you determine what program is the ideal fit for you, considering your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing will have on your taxes. Call us at 5852820960 to get you started.
Want to know more about refinancing? Call us at 5852820960.