When is Refinancing Worth it?
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In the market for a new mortgage? We'd be thrilled to discuss your mortgage needs! Give us a call at 866-300-1550. Want to get started? Apply Here.
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least two points below your current rate? Maybe several years ago that was wise advice, but since refinance costs have been getting lower, it may be time to look into it. Refinancing your mortgage has some advantages that can make it worth the up-front cost many times over.
Advantages
When you refinance, you might be able to lower your interest rate and monthly mortgage payment , sometimes considerably. You also might be given the option of pulling out some of the equity in your house by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With lower rates, you might also be able to build your home equity faster by moving to a shorter term mortgage.
Expenses and Fees
All of these advantages do come with some expense, though. You'll have the same kinds of fees as you did with your present mortgage. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
Paying discount points can result in a better interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the life of the refinanced loan can be great. We recommend that you consult with a tax professional before acting on rumors that any points paid may be deducted on your federal income taxes.
One more cost that a borrower may consider is that a lower interest rate will lower the interest amount you'll be able to deduct on your taxes. Call us at 866-300-1550 to help you do the math.
Most borrowers find that the monthly savings balance out the up-front cost of a refinance. We'll work with you to determine which mortgage loan program is right for you, considering your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing will have on your taxes. Call us at 866-300-1550 to get started.
Want to know more about refinancing your home? Give us a call: 866-300-1550.