Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe that was sound advice several years ago, but since refinance costs have been falling recently, it could be time to look into it. A refinanced mortgage loan may be worth its cost many times over, factoring in the benefits that come, as well as a reduced interest rate.
Benefits from Refinancing
You might be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage. You might also have the ability to "cash out" a portion of your equity, which you are able use to consolidate debt, improve your home, or plan a vacation. With lower interest rates, you might also get the chance to build up home equity more quickly by switching to a shorter-term mortgage loan.
As you probably know, you will have to pay for your process of refinancing. You will have to pay the same types of fees as you did with your existing mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You could offer to pay discount points (prepaid interest) to get a better rate of interest. Your savings on the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan total. You might be told that points can be deducted on your income taxes, but because tax regulations can be difficult to keep up with, we urge you to consult your tax professional before considering this in your calculations.
An additional expense that a borrower might take into account is that a reduced rate of interest will reduce the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 5137966020.
Ultimately, for most people the total of up-front costs to refinance will be paid back very quickly in savings each month. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 5137966020 to get started.
Want to know more about refinancing? Give us a call: 5137966020.