When is Refinancing Worth it?

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It has been said that only if your new interest is at least 2 points under your current rate, should you refinance your mortgage. Maybe that was sound advice several years ago, but since refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing your loan has a variety of benefits that can make it worth the up-front expenditure many times over.

Advantages of Refinancing

When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment amount, sometimes significantly. You also might have the option of pulling out some of your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. With lower rates, you may also get the chance to build your home equity more quickly by moving to a shorter-term mortgage loan.

Fees and Expenses

All these benefits do cost something, though. You'll pay the same sort of fees as with your current mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Doing the Math

You could offer to pay points (prepaid interest) to gain a lower interest rate. The amount you will save over the life of the mortgage could be substantial if you have paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on hear-say that any paid points can be deducted on your federal income taxes.

Speaking of taxes, when you bring down your interest rate, naturally you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at 866-840-8745 x2.

Most borrowers find that the monthly savings balance out the initial expenses of refinancing. We'll help you determine which mortgage loan program is best for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and how refinancing may effect your taxes. Call us at 866-840-8745 x2 to get started.

Want to know more about refinancing your home? Call us: 866-840-8745 x2.

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