When is Refinancing Worth it?

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It has been said that only in the case your new interest is at least two points lower, should you refinance your loan. That might have been accurate a while back, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage loan! Refinancing has some advantages that will often make it worth the initial cost a few times over.

Benefits

You could be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with your refinanced loan. Additionally, you might have the option of pulling out some of your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by switching to a shorter-term loan.

Expenses and Fees

All these benefits do cost something, though. With your refinance, you're paying for basically the same things you paid for during your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might investigate paying points to receive a lower interest rate. Your savings over the life of the mortgage may be substantial if you've paid up front about three percent of the new loan total. Please talk to 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 when you bring down your interest rate, naturally you will also be reducing the interest amount that you can deduct from your federal income taxes. This is another expense that some borrowers take into account. Call us at 877-310-6200 to help you do the math.

Most people find that the savings each month outweigh the up-front expenses of refinancing. We'll help you find out which program is right for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing may have on your taxes. Call us at 877-310-6200 to get you started.

Curious about refinancing? Give us a call: 877-310-6200.

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