Weighing the Options of Refinancing

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Some have said that only when your new interest will be at least 2 points under your current rate, should you refinance your loan. Perhaps that was good advice a number of years ago, but as refinance costs have been falling recently, it may be a good time to take a serious look. A refinance is often worth its cost many times over, factoring in the benefits that come, as well as a reduced interest rate.

Advantages of Refinancing

You could be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage loan. You may also have the option to "cash out" a portion of the built-up equity in your residence, which you can use to consolidate debts, add on to your home, or plan a vacation. You could have the option to refinance to a shorter-term mortgage, giving you the ability to add to your equity faster.

Fees and Expenses

Of course, you will have some fees and expenses during the the refinance process. You'll pay the same types of expenses and fees as with your existing home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might investigate paying points to reduce your interest rate. Your savings on the life of the mortgage may be substantial if you have paid up front about three percent of the new loan balance. Please consult a tax professional before acting on rumors that the paid points may be deducted on your taxes.

One more expense that a borrower might consider is that a reduced rate of interest will lower the interest amount you will deduct on your taxes. We can help you do the math! Call us at 718-441-7000.

Most people find that the monthly savings outweigh the up-front expenses of refinancing. We can help you explore 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 cash on hand. Call us at 718-441-7000 to get started.

Want to know more about refinancing? Give us a call at 718-441-7000.

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