When is Refinancing Worth it?

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Ever hear the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points lower than your existing rate? Maybe several years ago that was sage advice, but since refinance costs have been getting lower, it could be a good time to look into it. A refinanced mortgage loan is often worth its cost many times over, considering the advantages that it brings, along with a lower interest rate.

Benefits from Refinancing

You could be able to lower your interest rate (sometimes significantly) and make smaller monthly payments with your refinanced loan. You could also have the ability to "cash out" a portion of the built-up equity in your residence, that you are able use to consolidate debts, add on to your home, or plan a vacation. You may have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity quicker.

The Cost

Of course, you'll have some fees and expenses during the the refinance process. You'll be charged the same kinds of fees as you did with your existing home loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

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

Another cost that borrowers may take into account is that a lower interest rate 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 savings per month quickly balance out the up-front cost of refinancing. We will work with you to figure out what program is right for you, considering your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing could have on your taxes. Call us at 954.920.9799 to get you started.

Curious about refinancing? Give us a call at 954.920.9799.

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