Is Refinancing Worth the Cost?
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Are you looking for a mortgage? We can help! Call us at 9162758775. Want to get started? Apply Here.
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Ever hear the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least two points under your present rate? Maybe several years ago that was wise advice, but since refinance costs have been falling recently, it could be time to take a serious look. A refinanced mortgage may be worth its cost many times over, considering the advantages that come, as well as a lower interest rate.
Advantages
When you refinance, you could be able to reduce your interest rate and mortgage payment amount, perhaps significantly. You could also have the ability to "cash out" a portion of your equity, which you may use to take care of higher interest debt, add on to your home, or take a vacation. With reduced interest rates, you may also be able to build up home equity more quickly by changing to a shorter-term loan.
The Cost
All these benefits do come with some expense, though. With your refinance, you are paying for many of the same things you were charged for during your original mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could offer to pay discount points (prepaid interest) to gain a lower rate of interest. If you pay (on average) three percent of the loan amount initially, the savings for the life of the refinanced mortgage can be significant. We recommend that you talk to a tax professional before acting on rumors that the points paid may be deducted on your federal income taxes.
Speaking of taxes, when your interest rate is lowered, of course you will also be reducing the paid interest amount that you may deduct from your federal income taxes. This is another expense that borrowers consider. We can help you do the math! Call us at 9162758775.
In the end, for most the amount of initial costs to refinance will be paid back soon in savings each month. We'll help you determine which mortgage program is right for you, considering your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at 9162758775 to get you started.
Want to know more about refinancing your home? Call us: 9162758775.