Weighing the Options of Refinancing

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Some have said that only in the case your new interest is at least two points under your current rate, should you refinance your loan. That could have been accurate a while back, but with refinancing dropping in cost recently, it's a good time to consider a new mortgage loan! A refinance is often worth its cost many times over, considering the advantages that it brings, as well as a lower interest rate.

Advantages

When you refinance, you may have the ability to reduce the interest rate and monthly payment , perhaps by a lot. You also might have the option of tapping into the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You may be able to refinance to a shorter-term mortgage loan, giving you the ability to build your home equity quicker.

The Cost

As you probably expect, you will have some fees and expenses during your the refinance process. When you refinance, you're paying for basically the same things you were charged for when you got your original mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

You could offer to pay points (prepaid interest) to attain a lower interest rate. When you pay (on average) 3% of the mortgage loan amount up front, your savings for the life of the new loan can be substantial. You may have heard that points may be deducted on your income taxes, but since tax regulations are ever-changing, please speak with a tax professional before considering this in your calculations.

One more cost that a borrower may consider is that a lower rate of interest will lower the interest amount you will be able to deduct on your taxes. Call us at 561-395-4264 to help you do the math.

Most borrowers find that the savings each month quickly balance out the up-front cost of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your money on hand. Call us at 561-395-4264 to get you started.

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