When is Refinancing Worth it?

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Some have said that only when your new interest will be at least two points lower, should you refinance your loan. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it may be time to look into it. A refinanced mortgage loan is often worth its cost many times over, considering the benefits that it brings, as well as a lower interest rate.


When you refinance, you could be able to reduce the interest rate and monthly payment amount, perhaps by a lot. You also might be given the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage loan, enabling you to add to your equity quicker.

The Cost

Of course, you will have to pay for the the refinance process. You will have the same types of fees as you did with your present mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might offer to pay points (prepaid interest) to gain a lower interest rate. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the new mortgage can be great. Please talk to a tax professional before acting on hear-say that the paid points can be deducted on your taxes.

An additional cost that borrowers may consider is that a reduced interest rate will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 866-840-8745 x2.

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

Want to know more about refinancing? Give us a call: 866-840-8745 x2.

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