When is Refinancing Worth it?
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It has been said that only if your new interest will be at least 2 points below your current rate, should you refinance your loan. Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it may be a good time to look into it. Refinancing your mortgage has a variety of advantages that often make it worth the initial expenditure many times over.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage loan. You may also be able to "cash out" some of the built-up equity in your home, which you are able use to consolidate debt, add on to your home, or plan a vacation. With lower rates, you might also get the chance to build up home equity faster by switching to a shorter term mortgage.
Fees and Expenses
Of course, you'll have some fees and expenses during the process of refinancing. With your refinance, you are paying for basically the same things you paid for when you got your original mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
You might think about paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the refinanced mortgage loan can be great. You may have heard that points can be tax deductible, but because tax regulations can be ever-changing, we urge you to speak with your tax professional before making any decisions based on this.
Another thing about taxes is that if you lower your interest rate, it follows that you will also be reducing the paid interest amount that you will be able to deduct from your taxes. This is one more expense that some borrowers consider. Call us at (727) 743-1620 to help you do the math.
Most borrowers find that the monthly savings balance out the up-front expenses of refinancing. We'll help you determine what loan program is right for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and how refinancing can effect your taxes. Call us at (727) 743-1620 to get started.
Curious about refinancing? Call us at (727) 743-1620.