Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. That may have been valid years ago, but with refinancing dropping in cost over the last few years, it is never the wrong time to explore the options of a new mortgage loan! A refinance can be worth its cost many times over, considering the benefits that it brings, along with a lower interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced mortgage. You may also have the ability to "cash out" a portion of the built-up equity in your home, that you will be able use to consolidate debts, improve your home, or finance a vacation. You may be able to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.
Fees and Expenses
All of these benefits do come with some expense, though. You will be charged the same sort of fees as you did with your present home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can help you get a better interest rate. When you pay (on average) three percent of the loan amount at the start, your savings for the term of the new loan can be substantial. You may have heard that points may be deducted on your income taxes, but as tax regulations can be ever-changing, please consult your tax professional before considering this in your calculations.
Another thing about taxes is that once your interest rate is lowered, naturally you'll also be lowering the interest amount that you will be able to deduct from your federal income taxes. This is another cost that borrowers take into account. We can help you do the math! Call us at 720-598-8300.
Ultimately, for most the total of up-front costs to refinance will be made up soon in savings each month. We can help you figure out your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at 720-598-8300 to get started.
Curious about refinancing your home? Give us a call: 720-598-8300.