When is Refinancing Worth it?
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Shopping for a mortgage? We'd be thrilled to talk about our many mortgage solutions! Call us at 866-300-1550. Ready to get started? Apply Now.
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Ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least 2 points under your current rate? That might have been accurate years ago, but with refinancing dropping in cost over the last few years, it is a good time to explore the options of a new mortgage loan! Refinancing your mortgage loan has various advantages that can make it worth the up-front expenditure several times over.
Benefits
You may be able to lower your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with your refinanced mortgage. You may also have the ability to "cash out" some of your home equity, which you are able use to take care of higher interest debts, add on to your home, or plan a vacation. You might be able to refinance into a shorter-term mortgage program, enabling you to build up your home equity faster.
The Cost
All of these benefits do come with some expense, though. You'll have the same kinds of expenses and fees as you did with your present mortgage. These might include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
You could need to pay points (prepaid interest) to gain a better rate of interest. If you pay (on average) three percent of the loan amount at the start, your savings for the life of the new mortgage can be substantial. Please consult a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.
One more cost that borrowers may consider is that a reduced rate of interest will reduce the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 866-300-1550.
Most borrowers find that the savings each month quickly balance out the initial cost of a refinance. We will help you find out which loan program is ideal for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing may effect your taxes. Call us at 866-300-1550 to get you started.
Curious about refinancing your home? Call us: 866-300-1550.