Is Refinancing Worth the Cost?

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It has been said that only if your new interest will be at least 2 points under your current rate, should you refinance your mortgage. That may have been good advice a while back, but with refinancing dropping in cost over the last few years, it is a good time to consider a new mortgage loan! Refinancing your loan has a number of advantages that often make it worth the up-front cost many times over.

Advantages

When you refinance, you might be able to reduce the interest rate and monthly payment , sometimes by a lot. You may also have the ability to "cash out" some of the built-up equity in your home, that you may use to take care of higher interest debts, make home improvements, or take a vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to build up your home equity quicker.

The Cost

All of these advantages do cost something, though. With your refinance, you are paying for most of the same things you paid for during your current mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

Doing the Math

Paying points can result in a better interest rate. The money you will save on the life of the loan might be substantial if you have paid up front about three percent of the new loan balance. You might hear that the points may be deducted on your income taxes, but because tax regulations can be difficult to keep up with, please consult with your tax professional before considering this in your calculations.

Speaking of taxes, if you lower your interest rate, of course you will also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 4357556622.

Most people find that the savings each month outweigh the initial expenses of refinancing. We can help you explore 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 money on hand. Call us at 4357556622 to get you started.

Curious about refinancing your home? Call us: 4357556622.