When is Refinancing Worth it?
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Ever hear the old rule of thumb that says you should only refinance if the new interest rate will be at least 2 points lower than your present one? Perhaps that was good advice several years ago, but since refinance costs have been falling recently, it may be a good time to look into it. A refinanced mortgage can be worth its cost several times over, considering the advantages that it brings, along with a reduced interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced mortgage loan. You might also have the option to "cash out" some of your equity, that you are able use to take care of higher interest debts, make home improvements, or plan a vacation. With reduced rates, you may also get the chance to build your home equity more quickly by moving to a shorter term mortgage loan.
Of course, you'll have to pay for the the refinance process. You'll pay the same sort of expenses and fees as you did with your present mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying discount points can result in a lower interest rate. Your savings on the life of the loan may be substantial if you've paid up front about 3% of the new loan total. We recommend that you talk to 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 when your interest rate is reduced, it follows that you will also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers take into account. Call us at (888) 833-5192 to help you do the math.
Most people find that the monthly savings balance out the initial cost of a refinance. We will help you determine which loan program is ideal for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and what effect refinancing could have on your taxes. Call us at (888) 833-5192 to get started.
Want to know more about refinancing your home? Call us: (888) 833-5192.