Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least 2 points under your existing rate? Perhaps several years ago that was wise advice, but since refinance costs have been falling recently, it could be a good time to look into it. Refinancing has various benefits that often make it worth the initial expenditure several times over.

Advantages

When you refinance, you could be able to lower the interest rate and monthly mortgage payment amount, sometimes by a lot. You might also be able to "cash out" some of your equity, that you are able use to take care of higher interest debts, add on to your home, or take a vacation. You might have the option to refinance into a shorter-term mortgage, giving you the ability to build up your home equity faster.

Fees and Expenses

All these benefits do come with some expense, though. You'll pay the same sort of fees as you did with your present mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Doing the Math

Paying points can get you a lower interest rate. Your savings over the life of the mortgage may be substantial if you've paid up front about three percent of the new loan total. You may be told that points may be deducted on your income taxes, but as tax regulations are ever-changing, we urge you to consult a tax professional before making any decisions based on this.

One more cost that borrowers might consider is that a reduced interest rate will reduce the interest amount you will be able to deduct from your federal income taxes. Call us at 954.920.9799 to help you do the math.

Most borrowers find that the monthly savings outweigh the up-front cost of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at 954.920.9799 to get you started.

Curious about refinancing your home? Call us: 954.920.9799.

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