Weighing the Options of Refinancing
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Some have said that only if your new interest is at least two points lower, should you refinance your mortgage. Perhaps 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 has various benefits that often make it worth the up-front expenditure many times over.
Advantages of Refinancing
When you refinance, you might have the ability to reduce the interest rate and mortgage payment , perhaps by a lot. You might also have the ability to "cash out" a portion of the built-up equity in your home, that you are able use to take care of higher interest debts, improve your home, or finance a vacation. You could be able to refinance into a shorter-term mortgage, enabling you to build up your home equity quicker.
Of course, you'll have some fees and expenses during the the refinance process. When you refinance, you are paying for basically the same things you were charged for when you got your existing mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can help you attain a lower interest rate. The money you'll save on the life of the mortgage loan could be significant if you have paid up front about 3% of the new loan balance. You may have heard that the points may be deducted on your income taxes, but as tax regulations are ever-changing, we urge you to consult your tax professional before considering this in your calculations.
Another thing about taxes is that when you lower your interest rate, of course you will also be lowering the interest amount that you'll be able to deduct from your taxes. This is another cost that some borrowers take into account. Call us at 407-834-3377 to help you do the math.
In the end, for most the total of initial costs to refinance are paid back soon in savings each month. We can help you find out your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at 407-834-3377 to get started.
Want to know more about refinancing? Call us: 407-834-3377.