When is Refinancing Worth it?

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Ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least two points below your present one? Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinance may be worth its cost several times over, because of the advantages that may come, in addition to a lower interest rate.

Benefits from Refinancing

When you refinance, you could have the ability to lower your interest rate and monthly payment , perhaps by a lot. You could also have the option to "cash out" a portion of your home equity, which you will be able use to take care of higher interest debts, add on to your home, or plan a vacation. With lower interest rates, you may also be able to build your home equity more quickly by moving to a shorter-term loan.

Expenses and Fees

As you probably know, you will have some fees and expenses during your the refinance process. With your refinance, you're paying for many of the same things you paid for during your original mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can result in a lower interest rate. The money you'll save on the life of the mortgage may be substantial if you have paid up front about three percent of the new loan balance. Please consult a tax professional before acting on advice that these points paid can be deducted on your federal income taxes.

An additional expense that a borrower may consider is that a lower interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at 4357556622 to help you do the math.

Most people find that the monthly savings outweigh the up-front expenses of a refinance. We can help you figure out your options, 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 4357556622 to get started.

Want to know more about refinancing your home? Call us at 4357556622.