When is Refinancing Worth it?

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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but as refinance costs have been falling recently, it may be a good time to take a serious look. A refinance may be worth its cost several times over, considering the benefits that it brings, in addition to a reduced interest rate.

Advantages

You may be able to lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced mortgage. You may also have the option to "cash out" some of your equity, that you can use to take care of higher interest debt, make home improvements, or finance a vacation. With reduced interest rates, you may also get the chance to build up home equity more quickly by switching to a shorter term mortgage loan.

Fees and Expenses

As you probably know, you will have some fees and expenses during your process of refinancing. You will pay the same kinds of fees as you did with your current mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might consider paying points to be given a lower interest rate. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the new loan can be substantial. We recommend that you consult with a tax professional before acting on rumors that any paid points can be deducted on your federal income taxes.

One more cost that borrowers may consider is that a lower rate of interest will lower the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at (727) 743-1620.

All things considered, for most people the amount of initial costs to refinance are made up soon in savings each month. We can help you figure out your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at (727) 743-1620 to get started.

Curious about refinancing? Call us: (727) 743-1620.

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