When is Refinancing Worth it?
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Ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate is at least two points lower than your present one? That could have been good advice years ago, but with refinancing dropping in cost in recent years, it is a good time to explore the options of a new loan! Refinancing has various benefits that will often make it worth the initial expenditure several times over.
Benefits from Refinancing
When you refinance, you could be able to reduce the interest rate and monthly payment amount, perhaps by a lot. Additionally, you might be given the option of pulling out some of the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build your home equity faster by switching to a shorter term loan.
Expenses and Fees
All of these benefits do cost something, though. When you refinance, you are paying for basically the same things you were charged for during your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might investigate paying points to receive a reduced interest rate. The amount you'll save on the life of the mortgage may be significant if you've paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on advice that the paid points can be deducted on your taxes.
Speaking of taxes, once your interest rate is lowered, naturally you'll also be reducing the paid interest amount that you will be able to deduct from your taxes. This is another cost that borrowers consider. We can help you do the math! Call us at (941) 366-5800.
In the end, for most people the total of initial costs to refinance will be paid back very quickly in savings each month. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at (941) 366-5800 to get you started.
Want to know more about refinancing? Call us at (941) 366-5800.
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