Is Refinancing Worth the Cost?
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It has been said that only if your new interest is at least 2 points lower, should you refinance your mortgage. That could have been true a while back, but as refinancing has been costing less recently, it's a good time to think about a new mortgage loan! A refinanced loan is often worth its cost several times over, considering the benefits that come, in addition to a lower interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes by a lot) and have smaller monthly payments with a refinanced loan. You may also be able to "cash out" a portion of your home equity, that you are able use to consolidate debts, make home improvements, or take a vacation. You might have the option to refinance into a shorter-term mortgage, enabling you to add to your home equity quicker.
Expenses and Fees
As you probably know, you will have to pay for the the refinance process. You'll be charged the same kinds of expenses and fees as you did with your current home loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might consider paying points to receive a lower interest rate. Your savings over the life of the loan may be significant if you've paid up front about 3% 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 federal income taxes.
Another thing about taxes is that once you bring down your interest rate, naturally you will also be reducing the interest amount that you'll be able to deduct on your taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at (727) 743-1620.
In the end, for most borrowers the amount of initial costs to refinance are made up very quickly in savings each month. We can help you figure out your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (727) 743-1620 to get started.
Curious about refinancing? Give us a call: (727) 743-1620.