Is Refinancing Worth the Cost?
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It has been said that only when your new interest will be at least 2 points below your current rate, should you refinance your loan. That may have been accurate a while back, but with refinancing dropping in cost recently, it's a good time to consider a new loan! Refinancing your mortgage has a variety of advantages that often make it worth the up-front expenditure several times over.
Benefits from Refinancing
When you refinance, you may have the ability to lower the interest rate and mortgage payment amount, sometimes considerably. You may also have the option to "cash out" a portion of your equity, that you are able use to take care of higher interest debts, improve your home, or take a vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to build up your home equity quicker.
Of course, you will have some fees and expenses during your the refinance process. With your refinance, you're paying for most of the same things you were charged for when you obtained your original mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might think about paying points to be given a better interest rate. The money you'll save over the life of the loan might be significant if you've paid up front about 3% of the new loan total. You may have heard that the points can be deducted on your income taxes, but because tax regulations can be difficult to keep up with, we urge you to consult a tax professional before making any decisions based on this.
Another thing about taxes is that when your interest rate is lowered, of course you'll also be reducing the interest amount that you will be able to deduct on your taxes. This is one more cost that borrowers take into account. Call us at (727) 478-2797 to help you do the math.
Most people find that the savings each month quickly outweigh the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at (727) 478-2797 to get started.
Curious about refinancing? Call us at (727) 478-2797.