Is Refinancing Worth the Cost?

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Ever hear the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least two points lower than your current one? Perhaps several years ago that was sage advice, but since refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing has various benefits that often make it worth the initial cost many times over.

Advantages

When you refinance, you may have the ability to lower your interest rate and monthly payment , perhaps significantly. You also could be given the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage, enabling you to build up your home equity quicker.

Expenses and Fees

Of course, you will have to pay for the process of refinancing. When you refinance, you are paying for basically the same things you paid for during your original mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might look into paying points to reduce your interest rate. The money you will save on the life of the mortgage might be substantial if you've paid up front about three percent of the new loan balance. You might hear that the points can be tax deductible, but since tax regulations are difficult to keep up with, please consult your tax professional before depending on this.

Speaking of taxes, if you bring down your interest rate, it follows that you will also be reducing the interest amount that you can deduct from your federal income taxes. This is another cost that borrowers consider. We can help you do the math! Call us at 561-395-4264.

Ultimately, for most borrowers the amount of initial costs to refinance are made up very quickly in savings each month. We can help you find out what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 561-395-4264 to get started.

Want to know more about refinancing? Call us at 561-395-4264.


Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486