Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least two points under your current rate, should you refinance your loan. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to look into it. A refinanced mortgage may be worth its cost several times over, because of the advantages that may come, along with a lower interest rate.
When you refinance, you might be able to lower your interest rate and monthly mortgage payment amount, sometimes significantly. You may also be able to "cash out" a portion of the built-up equity in your residence, which you are able use to consolidate debt, improve your home, or finance a vacation. You might be able to refinance into a shorter-term mortgage, giving you the ability to build your equity quicker.
Fees and Expenses
All these advantages do come with some expense, though. When you refinance, you're paying for basically the same things you paid for at the time you got your existing mortgage loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
You might consider paying points to reduce your interest rate. If you pay (on average) 3% of the loan amount at the start, the savings for the term of the refinanced loan can be significant. We recommend that you consult with a tax professional before acting on rumors that these paid points can be deducted on your taxes.
Speaking of taxes, when you bring down your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is one more cost that some borrowers take into consideration. Call us at 720-598-8300 to help you do the math.
Most borrowers find that the savings each month quickly balance out the up-front cost of a refinance. We will help you find out what loan program is the ideal fit for you, looking at your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing may have on your taxes. Call us at 720-598-8300 to get you started.
Curious about refinancing your home? Call us at 720-598-8300.