Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that states you should only refinance if the new interest rate is at least 2 points under your current rate? Perhaps several years ago that was sage advice, but since refinance costs have been getting lower, it may be a good time to look into it. Refinancing has various advantages that can make it worth the initial expenditure a few times over.
Advantages
You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. You might also have the ability to "cash out" some of your home equity, which you are able use to consolidate debt, improve your home, or finance a vacation. You could have the option to refinance into a shorter-term mortgage, giving you the ability to build up your home equity quicker.
Fees and Expenses
Of course, you will have some fees and expenses during the the refinance process. You'll have to pay the same types of expenses and fees as you did with your existing home loan. These could include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can help you get a better interest rate. Your savings over the life of the mortgage could be significant if you have paid up front about three percent of the new loan total. Please talk to a tax professional before acting on advice that the points paid may be deducted on your taxes.
An additional expense that a borrower might take into account is that a lower rate of interest will reduce the interest amount you will be able to deduct from your taxes. Call us at 925-895-4155 to help you do the math.
Most people find that the monthly savings outweigh the up-front cost of refinancing. We'll help you determine which mortgage program is right for you, looking at your cash on hand, how likely you are to sell your home in the near future, and how refinancing could effect your taxes. Call us at 925-895-4155 to get started.
Curious about refinancing? Give us a call at 925-895-4155.