Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate will be at least 2 points under your existing rate? Maybe that was good advice several years ago, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing your loan has some benefits that often make it worth the initial expenditure many times over.
Benefits from Refinancing
When you refinance, you might be able to lower your interest rate and monthly payment amount, perhaps significantly. You might also be able to "cash out" some of your home equity, which you will be able use to consolidate debt, improve your home, or finance a vacation. With lower rates, you might also get the chance to build up home equity more quickly by switching to a shorter-term loan.
Expenses and Fees
Of course, you will have some fees and expenses during your process of refinancing. You'll have the same types of fees as with your present mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might look into paying points to reduce your interest rate. Your savings over the life of the mortgage could be substantial if you've paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on rumors that any points paid can be deducted on your taxes.
Speaking of taxes, if you bring down your interest rate, it follows that you will also be reducing the paid interest amount that you may deduct on your federal income taxes. This is another cost that borrowers take into consideration. Call us at (941) 366-5800 to help you do the math.
Most borrowers find that the savings each month outweigh the initial cost of a refinance. We will work with you to figure out what mortgage loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your house in the next few years, and how refinancing will effect your taxes. Call us at (941) 366-5800 to get you started.
Curious about refinancing? Call us: (941) 366-5800.
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