When is Refinancing Worth it?
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Some have said that only in the case your new interest is at least two points below your current rate, should you refinance your loan. Maybe several years ago that was sage advice, but since refinance costs have been falling recently, it could be time to look into it. Refinancing your loan has various advantages that will often make it worth the initial expenditure several times over.
Advantages of Refinancing
When you refinance, you could have the ability to lower the interest rate and mortgage payment , perhaps considerably. You might also be able to "cash out" some of your equity, which you may use to take care of higher interest debt, add on to your home, or finance a vacation. With reduced rates, you might also be able to build your home equity faster by moving to a shorter term mortgage.
Expenses and Fees
Of course, you'll have some fees and expenses during the process of refinancing. With your refinance, you're paying for basically the same things you were charged for at the time you obtained your current mortgage. Included in the list can 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. The amount you'll save on the life of the mortgage may be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult with a tax professional before acting on advice that the points paid can be deducted on your taxes.
An additional expense that a borrower may take into account 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 2147187183.
All things considered, for most people the amount of up-front costs to refinance will be made up very quickly in monthly savings. We can help you explore your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your money on hand. Call us at 2147187183 to get you started.
Curious about refinancing your home? Give us a call: 2147187183.