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 2 points under your present one? That could have been true a while back, but since refinancing has been costing less over the last few years, it's never the wrong time to consider a new loan! A refinanced loan is often worth its cost several times over, considering the advantages that it brings, along with a reduced interest rate.

Benefits

When you refinance, you may be able to reduce your interest rate and monthly mortgage payment amount, perhaps considerably. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You could be able to refinance into a shorter-term mortgage loan, giving you the ability to build your equity quicker.

Expenses and Fees

Of course, you will have to pay for your process of refinancing. You'll have the same kinds of expenses and fees as with your existing home loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You could need to pay discount points (prepaid interest) to get a more favorable rate of interest. The amount you will save over the life of the mortgage loan could be significant if you've paid up front about three percent of the new loan total. We recommend that you consult with a tax professional before acting on hear-say that the paid points may be deducted on your federal income taxes.

Another thing about taxes is that once you reduce your interest rate, it follows that you will also be lowering the interest amount that you will be able to deduct from your taxes. This is another expense that borrowers consider. We can help you do the math! Call us at 214-718-7183.

In the end, for most the amount of initial costs to refinance are made up very quickly in savings each month. We'll work with you to determine what mortgage loan program is best for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing will effect your taxes. Call us at 214-718-7183 to get started.

Curious about refinancing? Call us at 214-718-7183.