When is Refinancing Worth it?

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It has been said that only in the case your new interest will be at least two points under your current rate, should you refinance your mortgage. Maybe several years ago that was wise advice, but since refinance costs have been getting lower, it may be a good time to take a serious look. A refinanced mortgage loan may be worth its cost many times over, because of the benefits that it brings, along with a reduced interest rate.

Benefits from Refinancing

When you refinance, you may be able to reduce your interest rate and monthly mortgage payment , sometimes by a lot. You also might be given the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also get the chance to build your home equity faster by changing to a shorter-term mortgage loan.

Fees and Expenses

All of these benefits do cost something, though. When you refinance, you're paying for basically the same things you paid for during your original mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying points can help you get a better interest rate. The amount you'll save on the life of the loan might be substantial if you've paid up front about 3% of the new loan balance. You might have heard that these points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, please consult with a tax professional before depending on this.

Another expense that a borrower may take into account is that a lower interest rate will reduce the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at 719-425-2226.

Most borrowers find that the monthly savings quickly balance out the up-front expenses of a refinance. We will work with you to determine what program is perfect for you, considering your cash on hand, the likelihood of selling your house in the near future, and how refinancing could effect your taxes. Call us at 719-425-2226 to get you started.

Want to know more about refinancing your home? Call us: 719-425-2226.


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