Is Refinancing Worth the Cost?
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Are you looking for a new mortgage? We can help! Call us at 1-800-606-2794. Want to get started? Apply Online Now.
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Have you ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least 2 points below your current rate? Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be time to take a serious look. A refinance can be worth its cost many times over, because of the advantages that it brings, in addition to a reduced interest rate.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes by a lot) and make smaller monthly payments with your refinanced mortgage loan. You could also have the ability to "cash out" some of your home equity, that you will be able use to consolidate debt, add on to your home, or take a vacation. With reduced interest rates, you might also be able to build up home equity more quickly by changing to a shorter term loan.
The Cost
Of course, you'll have to pay for the the refinance process. You'll have the same sort of expenses and fees as with your existing mortgage. These might include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can get you a lower interest rate. If you pay (on average) three percent of the loan amount initially, your savings for the term of the refinanced mortgage loan can be significant. You might be told that points may be tax deductible, but as tax regulations are ever-changing, we urge you to consult your tax professional before depending on this.
Speaking of taxes, once your interest rate is lowered, naturally you will also be reducing the paid interest amount that you may deduct on your federal income taxes. This is one more cost that some borrowers consider. Call us at 1-800-606-2794 to help you do the math.
All things considered, for most people the total of initial costs to refinance will be made up soon in savings each month. We can help you find out your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 1-800-606-2794 to get started.
Curious about refinancing? Call us: 1-800-606-2794.