When is Refinancing Worth it?
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Looking for a loan? We'll be glad to talk about your mortgage needs! Call us at 866-300-1550. Ready to begin? Apply Here.
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Some have said that only when your new interest is at least two points lower, should you refinance your mortgage. That could have been true years ago, but with the fact that refinancing has been costing less in recent years, it is a good time to explore the options of a new mortgage! Refinancing has a number of benefits that often make it worth the initial cost a few times over.
Advantages of Refinancing
When you refinance, you could have the ability to reduce your interest rate and mortgage payment , sometimes significantly. You might also have the option to "cash out" a portion of your equity, which you will be able use to take care of higher interest debts, add on to your home, or take a vacation. With lower interest rates, you might also get the chance to build your home equity more quickly by changing to a shorter-term loan.
Expenses and Fees
All of these benefits do cost something, though. With your refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might need to pay discount points (prepaid interest) to attain a better interest rate. If you pay (on average) 3% of the mortgage loan amount up front, your savings for the term of the new loan can be great. You might hear that the points can be deducted on your income taxes, but because tax regulations can be difficult to keep up with, we urge you to speak with a tax professional before making any decisions based on this.
Speaking of taxes, when you bring down your interest rate, naturally you'll also be reducing the interest amount that you may deduct on your federal income taxes. This is another cost that some borrowers consider. Call us at 866-300-1550 to help you do the math.
Most people find that the savings each month quickly balance out the initial expenses of a refinance. We'll work with you to determine what mortgage program is ideal for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing will probably have on your taxes. Call us at 866-300-1550 to get you started.
Curious about refinancing? Call us: 866-300-1550.