When is Refinancing Worth it?

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It has been said that only when your new interest is at least two points lower, should you refinance your loan. That may have been true years ago, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new mortgage loan! Refinancing has a variety of benefits that will often make it worth the initial cost many times over.

Advantages of Refinancing

You might be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. Additionally, you might be given the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity faster.

Expenses and Fees

All these benefits do cost something, though. With your refinance, you're paying for many of the same things you were charged for during your current mortgage loan. These might include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

Paying discount points can result in a lower interest rate. The money you will save on the life of the mortgage loan may be substantial if you have paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on advice that the points paid may be deducted on your taxes.

Another thing about taxes is that when you lower your interest rate, of course you will also be reducing the paid interest amount that you can deduct on your taxes. This is another cost that some borrowers take into consideration. Call us at 4357556622 to help you do the math.

Ultimately, for most borrowers the amount of initial costs to refinance are paid back very quickly in monthly savings. We'll work with you to figure out which program is the right fit for you, considering your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing will have on your taxes. Call us at 4357556622 to get started.

Want to know more about refinancing your home? Give us a call: 4357556622.