Weighing the Options of Refinancing

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Ever hear the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least two points lower than your existing rate? That could have been true a while back, but with refinancing dropping in cost in recent years, it is never the wrong time to consider a new mortgage! A refinanced loan is often worth its cost several times over, because of the advantages that it brings, in addition to a lower interest rate.

Advantages

You might be able to bring down your interest rate (sometimes significantly) and make smaller mortgage payments with a refinanced loan. You may also be able to "cash out" a portion of the built-up equity in your residence, that you will be able use to consolidate debt, improve your home, or plan a vacation. With lower interest rates, you might also get the chance to build up home equity more quickly by moving to a shorter-term mortgage.

Fees and Expenses

All of these advantages do come with some expense, though. You'll pay the same sort of fees as you did with your existing home loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying points can help you get a better interest rate. Your savings over the life of the loan might be substantial if you've paid up front about three percent of the new loan total. Please talk to a tax professional before acting on advice that these points paid may be deducted on your federal income taxes.

Speaking of taxes, once you lower your interest rate, it follows that you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers consider. We can help you do the math! Call us at 561-395-4264.

Ultimately, for most the amount of initial costs to refinance are paid back very quickly in monthly savings. We'll work with you to find out which mortgage loan program is best for you, considering your cash on hand, the likelihood of selling your house in the next few years, and how refinancing will effect your taxes. Call us at 561-395-4264 to get you started.

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