Is Refinancing Worth the Cost?

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Some have said that only when your new interest is at least 2 points lower, should you refinance your loan. That could have been valid years ago, but with refinancing dropping in cost over the last few years, it is never the wrong time to think about a new mortgage loan! A refinance can be worth its cost many times over, because of the advantages that can come, along with a reduced interest rate.

Advantages

You may be able to lower your interest rate (sometimes significantly) and have smaller monthly payments with a refinanced loan. Additionally, you might be given the option of pulling out some of the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage, giving you the ability to build up your equity quicker.

Expenses and Fees

Of course, you will have some fees and expenses during the the refinance process. You will pay the same types of expenses and fees as with your existing home loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Do the Math

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

Another cost that borrowers might take into account is that a lower rate of interest will reduce the interest amount you will deduct from your taxes. Call us at (281) 778-0805 to help you do the math.

Most borrowers find that the monthly savings quickly balance out the up-front cost of a refinance. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at (281) 778-0805 to get started.

Curious about refinancing your home? Call us at (281) 778-0805.

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