Is Refinancing Worth the Cost?
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Some have said that only when your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps that was sound advice a number of years ago, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing has various benefits that will often make it worth the up-front expenditure a few times over.
Benefits
You might be able to bring down your interest rate (sometimes by a lot) and make smaller mortgage payments with a refinanced loan. You may also have the option to "cash out" a portion of the built-up equity in your residence, which you are able use to take care of higher interest debts, make home improvements, or plan a vacation. With reduced rates, you might also get the chance to build up home equity more quickly by moving to a shorter term mortgage.
Expenses and Fees
All of these advantages do come with some expense, though. You will be charged the same kinds of expenses and fees as with your current home loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can result in a lower interest rate. If you pay (on average) three percent of the loan amount initially, your savings for the life of the refinanced mortgage can be great. You may have heard that points can be tax deductible, but as tax regulations are difficult to keep up with, please speak with a tax professional before considering this in your calculations.
Another expense that a borrower may consider is that a lower rate of interest will lower the interest amount you will deduct from your taxes. We can help you do the math! Call us at 2817780805.
Most borrowers find that the savings each month balance out the up-front cost of refinancing. We can help you find out what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your money on hand. Call us at 2817780805 to get you started.
Want to know more about refinancing your home? Give us a call: 2817780805.