Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least 2 points under your current rate, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but as refinance costs have been getting lower, it may be time to take a serious look. Refinancing has a number of advantages that will often make it worth the initial expenditure many times over.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced mortgage loan. You also may have the option of tapping into the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You might have the option to refinance to a shorter-term mortgage, giving you the ability to build up your equity faster.
Expenses and Fees
All these benefits do cost something, though. You'll have the same sort of fees as with your current home loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying points can result in a lower interest rate. The amount you will save over the life of the mortgage loan may be significant if you have paid up front about three percent of the new loan total. You might hear that the points may be deducted on your income taxes, but as tax regulations are ever-changing, please consult your tax professional before depending on this.
Speaking of taxes, when your interest rate is reduced, it follows that you'll also be reducing the interest amount that you'll be able to deduct from your taxes. This is one more cost that borrowers take into consideration. We can help you do the math! Call us at (602) 332-9544.
Most people find that the monthly savings outweigh the initial expenses of a refinance. We'll help you figure out which program is best for you, considering your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing could have on your taxes. Call us at (602) 332-9544 to get started.
Want to know more about refinancing? Give us a call at (602) 332-9544.
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