When to Refinance
Weighing the Options of Refinancing
It has been said that only if your new interest is at least 2 points below your current rate, should you refinance your mortgage. That could have been valid years ago, but with the fact that refinancing has been costing less over the last few years, it is a good time to think about a new loan! A refinance may be worth its cost several times over, factoring in the advantages that it brings, in addition to a lower interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced loan. Additionally, you could be given the option of pulling out some of your home equity by “cashing out” a sum of money to fix up your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also get the chance to build up home equity more quickly by changing to a shorter-term loan.
Fees and Expenses
Of course, you will have some fees and expenses during the the refinance process. When you refinance, you are paying for basically the same things you paid for at the time you obtained your current mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender’s title insurance, settlement costs, and other expenses.
Do the Math
You might investigate paying points to reduce your interest rate. If you pay (on average) three percent of the loan amount up front, the savings for the life of the refinanced mortgage can be great. You may hear that these points can be tax deductible, but as tax regulations can be difficult to keep up with, please speak with a tax professional before considering this in your calculations.
One more cost that a borrower might take into account is that a lower interest rate will lower the interest amount you’ll be able to deduct from your taxes. We can help you do the math! Call us at 7862626486.
Ultimately, for most people the total of initial costs to refinance are made up very quickly in monthly savings. We can help you figure out your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 7862626486 to get started.
Want to know more about refinancing? Call us at 786-262=6486.
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