Weighing the Options of Refinancing
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It has been said that only when your new interest is at least two points under your current rate, should you refinance your loan. That may have been valid years ago, but with refinancing dropping in cost over the last few years, it's never the wrong time to consider a new mortgage! A refinance is often worth its cost several times over, considering the advantages that come, along with a reduced interest rate.
Advantages of Refinancing
You might be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced loan. You might also have the ability to "cash out" a portion of your equity, that you are able use to consolidate debt, improve your home, or take a vacation. You may be able to refinance into a shorter-term mortgage program, enabling you to build up your equity faster.
Fees and Expenses
All these advantages do cost something, though. With your refinance, you're paying for most of the same things you were charged for during your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could offer to pay discount points (prepaid interest) to get a better interest rate. When you pay (on average) 3% of the loan amount at the start, the savings for the term of the new mortgage loan can be great. You may have heard that these points can be deducted on your income taxes, but as tax regulations are difficult to keep up with, please speak with your tax professional before making any decisions based on this.
Another thing about taxes is that if you bring down your interest rate, it follows that you'll also be lowering the interest amount that you'll be able to deduct from your taxes. This is one more cost that borrowers consider. We can help you do the math! Call us at (281) 778-0805.
Most people find that the monthly savings outweigh the up-front expenses of refinancing. We can help you figure out your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (281) 778-0805 to get started.
Curious about refinancing? Call us at (281) 778-0805.