Weighing the Options of Refinancing
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It has been said that only when your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it may be a good time to look into it. Refinancing has various benefits that will often make it worth the up-front expenditure several times over.
When you refinance, you might be able to lower your interest rate and monthly payment , sometimes by a lot. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage loan, enabling you to build your home equity faster.
Expenses and Fees
As you probably know, you'll have some fees and expenses during the the refinance process. You'll pay the same kinds of expenses and fees as with your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can result in a lower interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the life of the new loan can be substantial. You might have heard that the points can be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please consult with a tax professional before depending on this.
Another thing about taxes is that once your interest rate is lowered, it follows that you'll also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that borrowers take into account. Call us at 8329162260 to help you do the math.
In the end, for most people the amount of up-front costs to refinance will be paid back very quickly in monthly savings. We will help you find out which loan program is right for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and the effect refinancing may have on your taxes. Call us at 8329162260 to get you started.
Want to know more about refinancing your home? Give us a call at 8329162260.