Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your loan. That might have been true a while back, but with refinancing dropping in cost over the last few years, it's a good time to consider a new mortgage! A refinance is often worth its cost several times over, considering the advantages that it brings, as well as a reduced interest rate.
Benefits
You might be able to bring down your interest rate (sometimes substantially) and have smaller monthly payments with your refinanced mortgage. You could also have the option to "cash out" a portion of the built-up equity in your residence, which you can use to take care of higher interest debt, make home improvements, or finance a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to build your home equity faster.
Expenses and Fees
All of these benefits do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for during your original mortgage loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might look into paying points to reduce your interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, the savings for the life of the new mortgage can be substantial. Please consult a tax professional before acting on hear-say that any points paid may be deducted on your taxes.
An additional cost that a borrower might consider is that a lower rate of interest will lower the interest amount you'll deduct on your taxes. Call us at 7184417000 to help you do the math.
Most borrowers find that the monthly savings outweigh the up-front cost of a refinance. We can help you figure out your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at 7184417000 to get you started.
Curious about refinancing? Give us a call at 7184417000.