When is Refinancing Worth it?
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Looking for mortgage advice? We'd be thrilled to talk about our mortgage offerings! Call us at 7205988300. Want to get started? Apply Here.
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Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least two points under your current rate? That may have been accurate years ago, but with the fact that refinancing has been costing less recently, it's never the wrong time to consider a new loan! Refinancing has various benefits that can make it worth the initial cost many times over.
Benefits
You might be able to bring down your interest rate (sometimes by a lot) and make smaller mortgage payments with a refinanced mortgage. Additionally, you might have the option of pulling out some of your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also be able to build up home equity faster by switching to a shorter term mortgage.
The Cost
All of these advantages do come with some expense, though. You will pay the same kinds of fees as you did with your current mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You could offer to pay discount points (prepaid interest) to attain a more favorable interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, the savings for the life of the refinanced mortgage can be substantial. You might be told that these points can be tax deductible, but as tax regulations are ever-changing, we urge you to consult with a tax professional before making decisions based on this.
Another cost that a borrower might take into account is that a reduced interest rate will lower the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at 7205988300.
Most people find that the savings each month quickly balance out the initial expenses of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 7205988300 to get you started.
Curious about refinancing? Give us a call: 7205988300.