When is Refinancing Worth it?
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Some have said that only in the case your new interest is at least 2 points below your current rate, should you refinance your mortgage. That could have been true years ago, but with refinancing dropping in cost in recent years, it's a good time to explore the options of a new mortgage! A refinanced mortgage is often worth its cost many times over, because of the advantages that can come, in addition to a lower interest rate.
Advantages of Refinancing
You may be able to lower your interest rate (sometimes substantially) and have smaller monthly payments with your refinanced mortgage loan. You may also have the option to "cash out" some of the built-up equity in your home, which you are able use to take care of higher interest debts, make home improvements, or finance a vacation. With lower rates, you may also be able to build your home equity more quickly by changing to a shorter term loan.
Expenses and Fees
All of these benefits do come with some expense, though. You will have the same types of fees as you did with your present mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might offer to pay points (prepaid interest) to get a lower interest rate. The money you will save on the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan balance. Please talk to a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.
One more expense that a borrower might take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 4787462063.
Most people find that the monthly savings balance out the initial cost of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at 4787462063 to get started.
Curious about refinancing your home? Give us a call at 4787462063.