Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only consider refinancing if your new interest rate is at least 2 points below your present rate? That could have been accurate years ago, but since refinancing has been costing less over the last few years, it is a good time to think about a new loan! A refinanced mortgage loan is often worth its cost many times over, considering the benefits that it brings, in addition to a reduced interest rate.
Benefits
You may be able to lower your interest rate (sometimes significantly) and reduce your monthly payment amount with a refinanced mortgage loan. You also could have the option of tapping into the equity in your property by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build up home equity faster by moving to a shorter-term mortgage.
Expenses and Fees
All of these advantages do come with some expense, though. You'll have the same sort of fees as you did with your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might investigate paying points to receive a lower interest rate. Your savings over the life of the loan might be substantial if you've paid up front about three percent of the new loan balance. You may be told that points may be tax deductible, but since tax regulations are difficult to keep up with, please consult a tax professional before depending on this.
Another thing about taxes is that once you bring down your interest rate, it follows that you'll also be lowering the paid interest amount that you can deduct on your federal income taxes. This is one more expense that some borrowers take into consideration. Call us at 9254610500 to help you do the math.
Ultimately, for most borrowers the total of initial costs to refinance are made up very quickly in monthly savings. We can help you explore what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 9254610500 to get you started.
Curious about refinancing? Give us a call at 9254610500.