Weighing the Options of Refinancing

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It has been said that only when your new interest is at least 2 points lower, should you refinance your mortgage. Maybe that was sound advice several years ago, but since refinance costs have been getting lower, it may be time to look into it. Refinancing has a number of benefits that often make it worth the up-front cost several times over.

Advantages of Refinancing

You might be able to lower your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced mortgage. You also could have the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage program, giving you the ability to build your equity faster.

Fees and Expenses

As you probably expect, you'll have to pay for the the refinance process. You will have the same kinds of expenses and fees as you did with your existing mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

You might need to pay discount points (prepaid interest) to attain a lower interest rate. When you pay (on average) 3% of the loan amount initially, your savings for the life of the new loan can be great. We recommend that you consult with a tax professional before acting on rumors that these points paid may be deducted on your taxes.

Speaking of taxes, if you reduce your interest rate, it follows that you will also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at 877-310-6200.

Ultimately, for most the amount of up-front costs to refinance will be made up very quickly in savings each month. We'll work with you to determine what mortgage loan program is the ideal fit for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and how refinancing could effect your taxes. Call us at 877-310-6200 to get you started.

Want to know more about refinancing your home? Give us a call: 877-310-6200.

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