Weighing the Options of Refinancing
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It has been said that only if your new interest will be at least two points lower, should you refinance your mortgage. That may have been sound advice a while back, but as refinancing has been costing less recently, it is never the wrong time to think about a new mortgage loan! Refinancing has various advantages that can make it worth the up-front expenditure a few times over.
Benefits
When you refinance, you may have the ability to lower the interest rate and monthly mortgage payment , sometimes by a lot. You also might be given the option of pulling out some of the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build your home equity faster by moving to a shorter term loan.
Expenses and Fees
As you probably know, you will have to pay for your the refinance process. When you refinance, you're paying for basically the same things you were charged for at the time you obtained your existing mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
You might think about paying points to reduce your interest rate. Your savings on the life of the mortgage may be substantial if you have paid up front about three percent of the new loan balance. We recommend that you consult a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.
Another thing about taxes is that if your interest rate is lowered, it follows that you'll also be lowering the interest amount that you can deduct on your federal income taxes. This is one more expense that borrowers take into consideration. We can help you do the math! Call us at 626.339.4445.
Most borrowers find that the monthly savings quickly balance out the initial expenses of refinancing. We can help you find out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 626.339.4445 to get started.
Want to know more about refinancing? Call us: 626.339.4445.