Weighing the Options of Refinancing
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It has been said that only if your new interest is at least 2 points lower, should you refinance your mortgage. That might have been true a while back, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to think about a new mortgage loan! Refinancing has some benefits that will often make it worth the up-front expenditure several times over.
When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment amount, perhaps significantly. You also might be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage program, enabling you to build your home equity quicker.
Expenses and Fees
All these advantages do cost something, though. With your refinance, you are paying for many of the same things you were charged for at the time you obtained your existing mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could need to pay discount points (prepaid interest) to get a more favorable interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, your savings for the life of the new mortgage can be substantial. Please talk to a tax professional before acting on hear-say that the paid points can be deducted on your federal income taxes.
Another thing about taxes is that when you bring down your interest rate, of course you will also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 813-966-1888.
Most people find that the savings each month quickly outweigh the up-front expenses of a refinance. We will help you determine what program is best for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and the effect refinancing will have on your taxes. Call us at 813-966-1888 to get you started.
Want to know more about refinancing your home? Give us a call at 813-966-1888.