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 two points under your current rate, should you refinance your mortgage. That may have been true a while back, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to think about a new mortgage loan! Refinancing your mortgage loan has various benefits that can make it worth the up-front cost a few times over.
When you refinance, you may have the ability to lower the interest rate and monthly mortgage payment amount, perhaps significantly. Additionally, you might be given the option of pulling out some of the equity in your house by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage loan, enabling you to build your home equity quicker.
Fees and Expenses
All these advantages do cost something, though. You'll be charged the same kinds of fees as you did with your current mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying points can result in a lower interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the life of the refinanced mortgage loan can be substantial. You may be told that these points may be deducted on your income taxes, but because tax regulations can be ever-changing, please consult your tax professional before depending on this.
Speaking of taxes, when you reduce your interest rate, it follows that you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers take into consideration. Call us at 720-598-8300 to help you do the math.
In the end, for most people the amount of up-front costs to refinance will be made up very quickly in savings each month. We can help you find out what your options are, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 720-598-8300 to get you started.
Curious about refinancing your home? Give us a call at 720-598-8300.