Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. Maybe that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be time to take a serious look. Refinancing your mortgage has some advantages that can make it worth the up-front cost a few times over.

Advantages

When you refinance, you could be able to reduce your interest rate and monthly payment amount, perhaps significantly. You might also be able to "cash out" a portion of the built-up equity in your residence, which you are able use to take care of higher interest debts, add on to your home, or finance a vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by switching to a shorter-term loan.

Fees and Expenses

All of these advantages do cost something, though. With your refinance, you are paying for basically the same things you were charged for during your existing mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Do the Math

You might need to pay points (prepaid interest) to get a lower rate of interest. The amount you'll save over the life of the loan could be significant if you have paid up front about 3% of the new loan total. Please talk to a tax professional before acting on hear-say that any paid points may be deducted on your federal income taxes.

An additional cost that a borrower may consider is that a lower rate of interest will reduce the interest amount you'll deduct on your taxes. Call us at 954.920.9799 to help you do the math.

Most borrowers find that the monthly savings quickly balance out the initial expenses of a refinance. We will work with you to determine what program is the right fit for you, taking into account your cash on hand, the likelihood of selling your house in the next few years, and how refinancing will effect your taxes. Call us at 954.920.9799 to get started.

Want to know more about refinancing your home? Give us a call: 954.920.9799.

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