Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest will be at least two points lower, should you refinance your loan. Maybe several years ago that was sage advice, but as refinance costs have been falling recently, it could be time to look into it. Refinancing has various advantages that can make it worth the initial expenditure many times over.
You might be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced mortgage loan. You may also have the ability to "cash out" some of the built-up equity in your residence, that you can use to take care of higher interest debts, improve your home, or plan a vacation. You might be able to refinance to a shorter-term mortgage program, giving you the ability to build up your equity quicker.
As you probably know, you will have some fees and expenses during the process of refinancing. When you refinance, you are paying for basically the same things you were charged for when you obtained 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
You could offer to pay discount points (prepaid interest) to gain a lower interest rate. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the refinanced mortgage loan can be great. You might hear that these points may be deducted on your income taxes, but as tax regulations are difficult to keep up with, we urge you to consult your tax professional before making decisions based on this.
Speaking of taxes, if you reduce your interest rate, it follows that you'll also be reducing the paid interest amount that you can deduct on your taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at (281) 778-0805.
Ultimately, for most the amount of initial costs to refinance are paid back soon in savings each month. We can help you explore your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at (281) 778-0805 to get started.
Want to know more about refinancing? Call us at (281) 778-0805.