Is Refinancing Worth the Cost?
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Some have said that only in the case your new interest is at least two points lower, should you refinance your loan. That might have been true years ago, but with refinancing dropping in cost in recent years, it is a good time to explore the options of a new mortgage! A refinanced loan can be worth its cost several times over, factoring in the advantages that can come, as well as a lower interest rate.
Benefits from Refinancing
When you refinance, you may be able to reduce the interest rate and mortgage payment , sometimes significantly. Additionally, you may be given the option of tapping into your home equity by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build your home equity faster by changing to a shorter term mortgage loan.
All of these advantages do cost something, though. When you refinance, you're paying for basically the same things you were charged for during your original mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can get you a lower interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the life of the refinanced mortgage can be great. Please consult with a tax professional before acting on rumors that any paid points may be deducted on your taxes.
Another cost that a borrower might take into account is that a reduced interest rate will reduce the interest amount you will be able to deduct on your federal income taxes. Call us at 866-840-8745 x2 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the initial expenses of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the next couple of years, and your cash on hand. Call us at 866-840-8745 x2 to get you started.
Want to know more about refinancing? Call us at 866-840-8745 x2.