Weighing the Options of Refinancing

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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it could be time to take a serious look. A refinanced mortgage is often worth its cost many times over, because of the advantages that can come, as well as a reduced interest rate.


When you refinance, you may have the ability to reduce the interest rate and monthly payment amount, perhaps considerably. You may also have the option to "cash out" a portion of the built-up equity in your home, which you will be able use to consolidate debts, make home improvements, or plan a vacation. With reduced interest rates, you might also get the chance to build up home equity faster by changing to a shorter term mortgage loan.

The Cost

All these advantages do come with some expense, though. You'll pay the same kinds of expenses and fees as with your current home loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You could need to pay points (prepaid interest) to attain a lower interest rate. Your savings on the life of the loan may be substantial if you have paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on hear-say that the points paid may be deducted on your taxes.

An additional expense that a borrower may consider is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at (727) 478-2797.

Most people find that the monthly savings quickly outweigh the up-front expenses of refinancing. We will work with you to figure out which program is the best fit for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and what effect refinancing will have on your taxes. Call us at (727) 478-2797 to get you started.

Want to know more about refinancing? Give us a call: (727) 478-2797.

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