Is Refinancing Worth the Cost?

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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. Maybe that was good advice several years ago, but as refinance costs have been falling recently, it may be a good time to look into it. A refinanced mortgage loan is often worth its cost several times over, considering the advantages that it brings, along with a reduced interest rate.

Advantages

You may be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with a refinanced mortgage. Additionally, you may have the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also be able to build your home equity faster by moving to a shorter term loan.

The Cost

All of these advantages do cost something, though. You'll be charged the same sort of fees as with your existing mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might think about paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount up front, your savings for the term of the refinanced mortgage can be substantial. You may hear that the points can be deducted on your income taxes, but because tax regulations are ever-changing, please consult with a tax professional before depending on this.

Speaking of taxes, if your interest rate is lowered, naturally you'll also be lowering the interest amount that you will be able to deduct from your federal income taxes. This is one more cost that some borrowers take into account. Call us at 4357556622 to help you do the math.

Most people find that the monthly savings balance out the initial expenses of a refinance. We'll help you determine what mortgage program is best for you, considering your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing may have on your taxes. Call us at 4357556622 to get you started.

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