Is Refinancing Worth the Cost?
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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate will be at least two points under your current one? That could have been valid a while back, but with the fact that refinancing has been costing less in recent years, it's a good time to consider a new mortgage loan! A refinanced mortgage can be worth its cost several times over, considering the advantages that can come, along with a lower interest rate.
When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment amount, perhaps by a lot. You also might be given the option of pulling out some of your home equity by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. With reduced rates, you may also get the chance to build up home equity faster by switching to a shorter term mortgage loan.
As you probably expect, you will have some fees and expenses during the the refinance process. When you refinance, you're paying for basically the same things you paid for during your current mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might look into paying points to reduce your interest rate. When you pay (on average) three percent of the loan amount up front, your savings for the life of the refinanced mortgage can be significant. We recommend that you talk to a tax professional before acting on advice that the points paid can be deducted on your federal income taxes.
One more expense that borrowers may consider is that a reduced interest rate will reduce the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at (727) 743-1620.
Ultimately, for most borrowers the amount of initial costs to refinance are made up soon in savings each month. We can help you find out your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at (727) 743-1620 to get started.
Curious about refinancing? Give us a call at (727) 743-1620.