Is Refinancing Worth the Cost?
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Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least two points under your present rate? That might have been valid years ago, but with refinancing dropping in cost over the last few years, it is a good time to consider a new mortgage loan! Refinancing has various advantages that can make it worth the up-front cost many times over.
Advantages of Refinancing
When you refinance, you may have the ability to lower the interest rate and monthly payment amount, perhaps by a lot. You might also have the ability to "cash out" some of the built-up equity in your residence, which you will be able use to take care of higher interest debts, add on to your home, or finance a vacation. You could be able to refinance to a shorter-term mortgage, enabling you to add to your home equity faster.
As you probably expect, you'll have to pay for the the refinance process. With your refinance, you are paying for many of the same things you paid for at the time you obtained your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might investigate paying points to reduce your interest rate. The amount you will save on the life of the mortgage loan could be significant if you've paid up front about 3% of the new loan balance. You might hear that the points may be tax deductible, but because tax regulations can be ever-changing, please speak with a tax professional before depending on this.
Speaking of taxes, once you bring down your interest rate, naturally you'll also be reducing the interest amount that you can deduct on your taxes. This is another cost that some borrowers take into account. Call us at 5122791520 to help you do the math.
Most people find that the savings per month quickly outweigh the up-front expenses of refinancing. We can help you find out your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 5122791520 to get started.
Curious about refinancing your home? Give us a call at 5122791520.