Is Refinancing Worth the Cost?

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

Advantages

You could be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage loan. You may also be able to "cash out" some of the built-up equity in your home, that you will be able use to consolidate debt, add on to your home, or finance a vacation. With lower interest rates, you might also be able to build up home equity faster by switching to a shorter-term mortgage loan.

Expenses and Fees

As you probably expect, you will have some fees and expenses during the process of refinancing. When you refinance, you're paying for a lot of the same things you paid for during your original mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to get a lower interest rate. The money you will save over the life of the mortgage loan might be substantial if you have paid up front about three percent of the new loan balance. You may be told that these points can be tax deductible, but as tax regulations can be ever-changing, please consult your tax professional before considering this in your calculations.

Another thing about taxes is that if your interest rate is lowered, of course you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers consider. Call us at 407-834-3377 to help you do the math.

In the end, for most the amount of initial costs to refinance will be made up very quickly in monthly savings. We will help you determine which program is perfect for you, considering your cash on hand, how likely you are to sell your home in the next few years, and how refinancing can effect your taxes. Call us at 407-834-3377 to get started.

Want to know more about refinancing? Call us: 407-834-3377.

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