Weighing the Options of Refinancing
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In the market for a new mortgage? We'd be thrilled to discuss our mortgage offerings! Call us at 720-598-8300. Ready to begin? Apply Here.
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Ever hear the old rule of thumb that says you should only refinance if your new interest rate will be at least 2 points below your current one? That could have been accurate years ago, but with refinancing dropping in cost over the last few years, it is never the wrong time to consider a new mortgage loan! Refinancing has a variety of benefits that often make it worth the initial cost several times over.
Advantages
When you refinance, you could have the ability to reduce your interest rate and monthly payment , sometimes by a lot. You could also have the ability to "cash out" a portion of your home equity, that you can use to take care of higher interest debt, make home improvements, or take a vacation. With lower interest rates, you may also be able to build your home equity faster by moving to a shorter-term loan.
Expenses and Fees
Of course, you will have some fees and expenses during your the refinance process. With your refinance, you're paying for basically the same things you paid for when you obtained your existing mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying points can result in a better interest rate. The money you will save over the life of the mortgage could be significant if you've paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on rumors that these points paid may be deducted on your taxes.
An additional expense that a borrower may consider is that a reduced interest rate will reduce the interest amount you will be able to deduct on your taxes. Call us at 720-598-8300 to help you do the math.
Most borrowers find that the savings each month outweigh the up-front cost of a refinance. We will help you determine what loan program is best for you, considering your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing could have on your taxes. Call us at 720-598-8300 to get you started.
Curious about refinancing? Give us a call at 720-598-8300.