Is Refinancing Worth the Cost?
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Some have said that only if your new interest will be at least two points lower, should you refinance your mortgage. That might have been true years ago, but with refinancing dropping in cost in recent years, it is a good time to think about a new mortgage! A refinance is often worth its cost many times over, considering the benefits that can come, as well as a lower interest rate.
Advantages of Refinancing
You might be able to lower your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced mortgage. You may also have the ability to "cash out" a portion of your home equity, which you are able use to consolidate debt, add on to your home, or plan a vacation. With lower rates, you might also get the chance to build up home equity faster by switching to a shorter-term mortgage loan.
As you probably expect, you will have to pay for the process of refinancing. You'll have to pay the same types of fees as with your present home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can help you get a lower interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the term of the refinanced loan can be substantial. You might hear that the points may be tax deductible, but since tax regulations are difficult to keep up with, please consult with your tax professional before depending on this.
Speaking of taxes, once you lower your interest rate, naturally you'll also be reducing the interest amount that you can deduct on your taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at 561-395-4264.
Most people find that the savings per month outweigh the up-front expenses of refinancing. We can help you explore your options, 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 you started.
Want to know more about refinancing your home? Give us a call at 561-395-4264.