Is Refinancing Worth the Cost?
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Some have said that only when your new interest will be at least 2 points below your current rate, should you refinance your loan. That could have been accurate a while back, but as refinancing has been costing less over the last few years, it's never the wrong time to think about a new mortgage loan! A refinanced mortgage loan is often worth its cost several times over, considering the advantages that it brings, in addition to a reduced interest rate.
You could be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced mortgage. You could also be able to "cash out" some of the built-up equity in your residence, which you are able use to take care of higher interest debt, add on to your home, or plan a vacation. You might have the option to refinance to a shorter-term mortgage program, enabling you to add to your equity faster.
Expenses and Fees
All these benefits do cost something, though. You'll be charged the same kinds of fees as with your existing mortgage. These could include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can get you a lower interest rate. When you pay (on average) three percent of the loan amount initially, the savings for the life of the refinanced mortgage can be substantial. You may hear that the points may be deducted on your income taxes, but because tax regulations are difficult to keep up with, please consult a tax professional before considering this in your calculations.
Another expense that a borrower may consider 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 214-383-9400.
Ultimately, for most borrowers the amount of initial costs to refinance will be paid back soon in monthly savings. We will help you determine which program is the ideal fit for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing will effect your taxes. Call us at 214-383-9400 to get you started.
Curious about refinancing? Call us at 214-383-9400.