When is Refinancing Worth it?

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Some have said that only in the case your new interest is at least 2 points lower, should you refinance your loan. That might have been true a while back, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage loan! Refinancing your mortgage has some benefits that can make it worth the initial expenditure a few times over.

Benefits from Refinancing

When you refinance, you may be able to lower your interest rate and monthly payment , perhaps considerably. You also might have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build up home equity faster by changing to a shorter-term loan.

Expenses and Fees

As you probably know, you will have some fees and expenses during the process of refinancing. You'll be charged the same types of expenses and fees as with your present mortgage. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Do the Math

You might offer to pay discount points (prepaid interest) to gain a more favorable rate of interest. When you pay (on average) 3% of the mortgage loan amount at the start, your savings for the life of the new mortgage can be substantial. You might hear that these points can be tax deductible, but because tax regulations are ever-changing, we urge you to speak with your tax professional before considering this in your calculations.

One more expense that a borrower might take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at (334) 285-8850.

Ultimately, for most people the total of initial costs to refinance will be made up soon in monthly savings. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at (334) 285-8850 to get you started.

Want to know more about refinancing? Give us a call: (334) 285-8850.

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