Weighing the Options of Refinancing
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It has been said that only if your new interest is at least two points lower, should you refinance your mortgage. That may have been accurate a while back, but with refinancing dropping in cost in recent years, it is never the wrong time to consider a new mortgage! A refinanced mortgage loan may be worth its cost several times over, because of the advantages that may come, in addition to a reduced interest rate.
When you refinance, you could have the ability to reduce the interest rate and mortgage payment amount, perhaps considerably. You might also have the option to "cash out" a portion of your equity, which you are able use to consolidate debt, add on to your home, or take a vacation. With lower rates, you might also get the chance to build your home equity more quickly by moving to a shorter term mortgage loan.
Fees and Expenses
Of course, you will have to pay for the process of refinancing. When you refinance, you are paying for many of the same things you were charged for at the time you obtained your original mortgage loan. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying discount points can help you attain a better interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, the savings for the term of the new mortgage loan can be great. You may have heard that these points can be tax deductible, but because tax regulations can be ever-changing, we urge you to speak with your tax professional before depending on this.
Speaking of taxes, if your interest rate is reduced, naturally you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is another expense that some borrowers take into consideration. Call us at (941) 366-5800 to help you do the math.
Most people find that the monthly savings quickly balance out the up-front expenses of a refinance. We'll work with you to figure out which mortgage program is best for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing could effect your taxes. Call us at (941) 366-5800 to get you started.
Curious about refinancing? Call us at (941) 366-5800.