Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that states you should only refinance if your new interest rate is at least two points under your current one? Perhaps that was sound advice a number of years ago, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing your mortgage loan has a variety of benefits that will often make it worth the up-front cost many times over.
Advantages of Refinancing
When you refinance, you could have the ability to reduce the interest rate and monthly payment , perhaps considerably. You may also have the option to "cash out" some of your equity, that you can use to consolidate debts, make home improvements, or take a vacation. With lower rates, you might also get the chance to build your home equity more quickly by switching to a shorter-term loan.
The Cost
Of course, you will have some fees and expenses during the the refinance process. You will have the same types of fees as you did with your current mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can result in a better interest rate. When you pay (on average) three percent of the mortgage loan amount initially, the savings for the term of the refinanced loan can be substantial. Please talk to a tax professional before acting on rumors that the paid points can be deducted on your taxes.
Speaking of taxes, when your interest rate is reduced, naturally you will also be reducing the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers consider. We can help you do the math! Call us at .
Most people find that the monthly savings balance out the initial expenses of a refinance. We will help you find out which loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and how refinancing may effect your taxes. Call us at to get started.
Curious about refinancing your home? Call us at .