When is Refinancing Worth it?

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. That might have been accurate a while back, but as refinancing has been costing less recently, it is a good time to explore the options of a new mortgage! A refinance can be worth its cost many times over, because of the benefits that it brings, as well as a lower interest rate.

Benefits

You may be able to bring down your interest rate (sometimes substantially) and make smaller mortgage payments with a refinanced mortgage loan. You might 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 debt, make home improvements, or take a vacation. With lower interest rates, you may also be able to build your home equity more quickly by switching to a shorter term mortgage.

Fees and Expenses

Of course, you will have some fees and expenses during your the refinance process. You'll have the same kinds of expenses and fees as with your present mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might investigate paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the refinanced mortgage loan can be substantial. Please consult with a tax professional before acting on advice that these paid points may be deducted on your federal income taxes.

Another thing about taxes is that once your interest rate is reduced, naturally you will also be lowering the interest amount that you'll be able to deduct from your taxes. This is another expense that borrowers take into account. Call us at (941) 366-5800 to help you do the math.

Most borrowers find that the savings per month outweigh the up-front expenses of refinancing. We'll help you determine what mortgage loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing may have on your taxes. Call us at (941) 366-5800 to get you started.

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

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