Weighing the Options of Refinancing

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It has been said that only in the case your new interest is at least two points lower, should you refinance your loan. That may have been good advice years ago, but as refinancing has been costing less recently, it is never the wrong time to consider a new loan! Refinancing has a variety of advantages that can make it worth the up-front cost a few times over.

Advantages

You may be able to lower your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with your refinanced mortgage. You might also have the ability to "cash out" some of the built-up equity in your residence, that you will be able use to take care of higher interest debts, make home improvements, or finance a vacation. With reduced interest rates, you might also be able to build up home equity faster by moving to a shorter-term mortgage loan.

The Cost

As you probably know, you'll have to pay for your the refinance process. You will be charged the same kinds of fees as with your present mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might consider paying points to receive a reduced interest rate. If you pay (on average) 3% of the loan amount at the start, the savings for the life of the refinanced mortgage loan can be substantial. You may have heard that points can be tax deductible, but since tax regulations are difficult to keep up with, please consult with your tax professional before depending on this.

Another thing about taxes is that once your interest rate is lowered, it follows that you will also be lowering the paid interest amount that you can deduct from your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at (941) 366-5800.

Most people find that the savings each month outweigh the up-front expenses of refinancing. We will help you find out which loan program is ideal for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and how refinancing may effect your taxes. Call us at (941) 366-5800 to get started.

Curious about refinancing your home? Give us a call at (941) 366-5800.

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