When is Refinancing Worth it?

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It has been said that only if your new interest will be at least two points under your current rate, should you refinance your loan. That may have been true a while back, but with refinancing dropping in cost over the last few years, it's a good time to explore the options of a new mortgage! Refinancing has a variety of benefits that can make it worth the up-front expenditure many times over.

Advantages of Refinancing

You may be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced loan. You could also have the option to "cash out" a portion of the built-up equity in your home, that you will be able use to consolidate debts, make home improvements, or take a vacation. You may have the option to refinance to a shorter-term mortgage loan, giving you the ability to build up your equity quicker.

The Cost

Of course, you will have some fees and expenses during your process of refinancing. You'll be charged the same kinds of fees as you did with your current home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying discount points can result in a better interest rate. Your savings on the life of the mortgage loan might be substantial if you've paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on advice that the paid points may be deducted on your federal income taxes.

One more cost that borrowers may take into account is that a reduced rate of interest will lower the interest amount you'll deduct from your federal income taxes. Call us at 561-395-4264 to help you do the math.

Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We'll work with you to figure out which loan program is ideal for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing may have on your taxes. Call us at 561-395-4264 to get started.

Curious about refinancing your home? Give us a call at 561-395-4264.