Weighing the Options of Refinancing
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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe several years ago that was good advice, but as refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing has a variety of advantages that often make it worth the up-front expenditure several times over.
You may be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with a refinanced loan. You might also have the ability to "cash out" a portion of the built-up equity in your home, that you are able use to consolidate debts, improve your home, or plan a vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to build up your home equity quicker.
Expenses and Fees
As you probably know, you will have some fees and expenses during the process of refinancing. You'll have to pay the same types of fees as you did with your existing home loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might offer to pay points (prepaid interest) to attain a lower interest rate. When you pay (on average) 3% of the mortgage loan amount initially, the savings for the term of the new loan can be substantial. You might be told that the points can be deducted on your income taxes, but because tax regulations are difficult to keep up with, we urge you to speak with your tax professional before considering this in your calculations.
Speaking of taxes, once your interest rate is reduced, it follows that you'll also be lowering the paid interest amount that you can deduct from your taxes. This is one more expense that borrowers take into consideration. We can help you do the math! Call us at (727) 527-1454.
Most borrowers find that the monthly savings quickly balance out the initial expenses of a refinance. We will work with you to determine which mortgage loan program is perfect for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing could effect your taxes. Call us at (727) 527-1454 to get you started.
Curious about refinancing your home? Call us: (727) 527-1454.