Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least two points lower than your current one? That may have been true years ago, but with refinancing dropping in cost recently, it's a good time to consider a new mortgage! Refinancing your loan has various benefits that will often make it worth the initial expenditure many times over.
Advantages
You could be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with a refinanced mortgage loan. You may also have the ability to "cash out" some of your home equity, which you are able use to take care of higher interest debts, improve your home, or take a vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to build up your equity faster.
Expenses and Fees
All these benefits do cost something, though. You will be charged the same sort of expenses and fees as you did with your present mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might consider paying points to reduce your interest rate. The amount you'll save over the life of the loan may be substantial if you've paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on hear-say that any paid points can be deducted on your taxes.
Another thing about taxes is that when your interest rate is reduced, naturally you will also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is another cost that 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 initial cost of refinancing. We will work with you to determine which program is ideal for you, taking into account your cash on hand, the likelihood of selling your house in the next few years, and what effect refinancing might have on your taxes. Call us at (941) 366-5800 to get started.
Want to know more about refinancing your home? Call us: (941) 366-5800.