Is Refinancing Worth the Cost?
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Some have said that only if your new interest is at least 2 points under your current rate, should you refinance your loan. That could have been valid a while back, but with refinancing dropping in cost recently, it's a good time to consider a new loan! A refinance can be worth its cost several times over, considering the benefits that come, along with a reduced interest rate.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced loan. You could also have the ability to "cash out" a portion of your equity, that you can use to take care of higher interest debts, make home improvements, or take a vacation. You could have the option to refinance to a shorter-term mortgage program, giving you the ability to build up your home equity quicker.
All these advantages do cost something, though. With your refinance, you are paying for basically the same things you were charged for at the time you obtained your original mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to reduce your interest rate. Your savings on the life of the mortgage loan could be substantial if you've paid up front about 3% of the new loan total. You may hear that points can be tax deductible, but as tax regulations are ever-changing, we urge you to consult a tax professional before considering this in your calculations.
Speaking of taxes, if your interest rate is lowered, it follows that you'll also be lowering the interest amount that you'll be able to deduct on your taxes. This is one more cost that borrowers consider. Call us at 719-425-2226 to help you do the math.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We can help you figure out your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 719-425-2226 to get started.
Want to know more about refinancing your home? Call us: 719-425-2226.