Weighing the Options of Refinancing

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Ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least two points under your present rate? Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be time to look into it. A refinanced mortgage may be worth its cost many times over, because of the benefits that it brings, in addition to a reduced interest rate.

Benefits

When you refinance, you may have the ability to reduce your interest rate and mortgage payment , sometimes by a lot. Additionally, you may have the option of tapping into the equity in your property by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also get the chance to build up home equity faster by moving to a shorter-term mortgage.

The Cost

Of course, you will have to pay for your the refinance process. You will have the same kinds of expenses and fees as with your present mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You might consider paying points to reduce your interest rate. Your savings over the life of the loan could be substantial if you've paid up front about 3% of the new loan total. Please consult with a tax professional before acting on advice that any points paid can be deducted on your federal income taxes.

Speaking of taxes, if your interest rate is lowered, it follows that you'll also be reducing the interest amount that you may deduct from your federal income taxes. This is another expense that some borrowers consider. Call us at (727) 478-2797 to help you do the math.

Ultimately, for most the amount of up-front costs to refinance will be paid back very quickly in monthly savings. We'll work with you to determine which loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and how refinancing could effect your taxes. Call us at (727) 478-2797 to get you started.

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

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