Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points lower than your present one? That might have been valid a while back, but with the fact that refinancing has been costing less over the last few years, it is a good time to consider a new mortgage loan! A refinance can be worth its cost many times over, considering the advantages that it brings, along with a reduced interest rate.
Benefits
You could be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced loan. You also might be given the option of pulling out some of your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage program, giving you the ability to add to your home equity faster.
The Cost
Of course, you will have to pay for your process of refinancing. When you refinance, you are paying for basically the same things you were charged for during your existing mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can result in a lower interest rate. If you pay (on average) three percent of the loan amount at the start, your savings for the life of the new loan can be substantial. We recommend that you consult a tax professional before acting on hear-say that the paid points may be deducted on your taxes.
One more cost that borrowers might take into account is that a lower rate of interest will reduce the interest amount you'll be able to deduct on your taxes. Call us at 4357556622 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at 4357556622 to get you started.
Curious about refinancing your home? Give us a call: 4357556622.