Weighing the Options of Refinancing
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Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least two points below your present one? That might have been accurate years ago, but with refinancing dropping in cost recently, it is a good time to explore the options of a new mortgage loan! Refinancing has a variety of benefits that can make it worth the initial expenditure a few times over.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with your refinanced mortgage loan. You may also have the ability to "cash out" some of your equity, that you are able use to take care of higher interest debts, add on to your home, or plan a vacation. You could be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your equity quicker.
Of course, you'll have some fees and expenses during the process of refinancing. With your refinance, you are paying for basically the same things you paid for during your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay points (prepaid interest) to attain a lower interest rate. When you pay (on average) three percent of the loan amount at the start, the savings for the life of the refinanced mortgage can be substantial. You may hear that these points may be tax deductible, but because tax regulations are difficult to keep up with, we urge you to speak with a tax professional before depending on this.
Another thing about taxes is that once your interest rate is reduced, naturally you will also be lowering the paid interest amount that you may deduct from your taxes. This is one more expense that some borrowers take into account. We can help you do the math! Call us at 817-909-7916.
In the end, for most borrowers the amount of up-front costs to refinance are made up soon in savings each month. We'll help you determine what mortgage program is perfect for you, considering your cash on hand, the likelihood of selling your home in the next few years, and how refinancing could effect your taxes. Call us at 817-909-7916 to get you started.
Curious about refinancing? Call us: 817-909-7916.