Weighing the Options of Refinancing
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It has been said that only in the case your new interest is at least two points lower, should you refinance your mortgage. That may have been true a while back, but with refinancing dropping in cost recently, it's a good time to consider a new mortgage! Refinancing has a number of advantages that often make it worth the up-front expenditure several times over.
When you refinance, you could be able to lower the interest rate and mortgage payment , sometimes significantly. You may also have the ability to "cash out" some of the built-up equity in your residence, that you can use to take care of higher interest debts, make home improvements, or finance a vacation. With lower rates, you might also get the chance to build up home equity more quickly by switching to a shorter term mortgage.
Of course, you'll have to pay for the process of refinancing. You will have the same types of expenses and fees as with your present home loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying points can get you a better interest rate. Your savings on the life of the loan could be substantial if you've paid up front about 3% of the new loan total. You might be told that the points may be deducted on your income taxes, but because tax regulations are difficult to keep up with, we urge you to consult with your tax professional before making decisions based on this.
Another thing about taxes is that if your interest rate is lowered, naturally you will also be reducing the interest amount that you may deduct on your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 407-834-3377.
Ultimately, for most borrowers the amount of initial costs to refinance will be made up soon in savings each month. We can help you explore what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at 407-834-3377 to get you started.
Want to know more about refinancing your home? Call us at 407-834-3377.