When is Refinancing Worth it?
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It has been said that only when your new interest will be at least two points under your current rate, should you refinance your loan. Perhaps several years ago that was good advice, but since refinance costs have been getting lower, it could be a good time to take a serious look. A refinance may be worth its cost several times over, considering the benefits that can come, along with a lower interest rate.
You might be able to bring down your interest rate (sometimes by a lot) and make smaller monthly payments with a refinanced mortgage loan. You may also have the option to "cash out" some of the built-up equity in your home, that you will be able use to take care of higher interest debts, add on to your home, or finance a vacation. You might be able to refinance to a shorter-term mortgage, enabling you to build up your equity faster.
Fees and Expenses
Of course, you'll have to pay for the process of refinancing. When you refinance, you are paying for most of the same things you were charged for when you got your existing mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might investigate paying points to reduce your interest rate. Your savings on the life of the mortgage loan may be significant if you've paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on advice that the points paid may be deducted on your taxes.
Speaking of taxes, when your interest rate is lowered, it follows that you will also be lowering the interest amount that you'll be able to deduct from your taxes. This is another cost that some borrowers consider. We can help you do the math! Call us at (334) 285-8850.
Ultimately, for most borrowers the total of up-front costs to refinance are paid back soon in monthly savings. We'll work with you to find out what mortgage loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing will have on your taxes. Call us at (334) 285-8850 to get you started.
Curious about refinancing? Call us at (334) 285-8850.