When is Refinancing Worth it?
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Looking for a mortgage loan? We'll be glad to talk about our many mortgage solutions! Give us a call at 9254610500. Ready to begin? Apply Now.
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Ever heard the old rule of thumb that states you should only consider refinancing if your new interest rate is at least 2 points lower than your current rate? That might have been sound advice a while back, but with refinancing dropping in cost recently, it is a good time to think about a new loan! Refinancing has a number of advantages that often make it worth the up-front expenditure a few times over.
Benefits
When you refinance, you may have the ability to lower the interest rate and monthly payment amount, perhaps by a lot. You could also have the option to "cash out" a portion of your home equity, that you are able use to consolidate debts, improve your home, or plan a vacation. With lower interest rates, you might also get the chance to build your home equity more quickly by changing to a shorter term loan.
Fees and Expenses
All these advantages do cost something, though. You will have the same types of fees as with your current home loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
You might investigate paying points to be given a better interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, the savings for the life of the refinanced mortgage can be substantial. We recommend that you talk to a tax professional before acting on rumors that the points paid can be deducted on your federal income taxes.
Speaking of taxes, when your interest rate is reduced, it follows that you will also be reducing the interest amount that you can deduct on your taxes. This is another expense that borrowers consider. Call us at 9254610500 to help you do the math.
Most borrowers find that the savings per month quickly balance out the initial cost of a refinance. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 9254610500 to get started.
Curious about refinancing your home? Give us a call: 9254610500.