Weighing the Options of Refinancing
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Ever heard the old rule of thumb that states you should only refinance if your new interest rate is at least two points under your existing rate? That could have been good advice a while back, but with refinancing dropping in cost over the last few years, it is a good time to think about a new loan! A refinanced mortgage loan may be worth its cost many times over, considering the advantages that may come, as well as a reduced interest rate.
Advantages
You could be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage. Additionally, you might be given the option of pulling out some of the equity in your house by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With reduced interest rates, you may also get the chance to build up home equity faster by changing to a shorter-term loan.
Fees and Expenses
Of course, you'll have to pay for your the refinance process. You'll have to pay the same types of expenses and fees as you did with your present home loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might look into paying points to be given a better interest rate. Your savings over the life of the mortgage loan could be significant if you've paid up front about 3% of the new loan balance. You might have heard that these points may be deducted on your income taxes, but because tax regulations are difficult to keep up with, please consult a tax professional before depending on this.
Another expense that borrowers may take into account is that a lower interest rate will reduce the interest amount you'll be able to deduct from your federal income taxes. We can help you do the math! Call us at 866-300-1550.
In the end, for most borrowers the amount of up-front costs to refinance are paid back soon in monthly savings. 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 money on hand. Call us at 866-300-1550 to get started.
Curious about refinancing your home? Call us at 866-300-1550.