When is Refinancing Worth it?

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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate will be at least two points below your present rate? Perhaps several years ago that was wise advice, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinance is often worth its cost several times over, because of the advantages that it brings, as well as a lower interest rate.

Benefits

You could be able to bring down your interest rate (sometimes by a lot) and make smaller monthly payments with your refinanced mortgage loan. Additionally, you may be given the option of pulling out some of your home equity by "cashing out" some money 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 build up your home equity faster.

Fees and Expenses

All of these benefits do come with some expense, though. You will have the same sort of fees as with your existing mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might consider paying points to receive a lower interest rate. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the new mortgage loan can be great. We recommend that you consult a tax professional before acting on hear-say that any points paid may be deducted on your federal income taxes.

Another thing about taxes is that if you bring down your interest rate, it follows that you will also be lowering the paid interest amount that you will be able to deduct from your taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at (478) 746-2063.

Most people find that the savings per month quickly balance out the up-front expenses of a refinance. We will work with you to figure out which mortgage loan program is best for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will have on your taxes. Call us at (478) 746-2063 to get started.

Curious about refinancing your home? Call us at (478) 746-2063.

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