When is Refinancing Worth it?

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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. That may have been good advice a while back, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage! A refinance can be worth its cost several times over, because of the benefits that it brings, as well as a reduced interest rate.

Advantages of Refinancing

When you refinance, you might be able to reduce your interest rate and mortgage payment , perhaps significantly. You may also have the ability to "cash out" a portion of the built-up equity in your home, which you are able use to consolidate debt, add on to your home, or take a vacation. With lower rates, you might also be able to build your home equity faster by moving to a shorter term mortgage.

Expenses and Fees

Of course, you will have some fees and expenses during your process of refinancing. You will pay the same kinds of fees as you did with your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might consider paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, the savings for the term of the refinanced loan can be substantial. We recommend that you talk to a tax professional before acting on rumors that the paid points may be deducted on your federal income taxes.

One more expense that borrowers might consider is that a reduced interest rate will lower the interest amount you'll be able to deduct from your federal income taxes. We can help you do the math! Call us at (972) 292-0448.

All things considered, for most borrowers the amount of up-front costs to refinance are made up very quickly in monthly savings. We will work with you to figure out what loan program is perfect for you, considering your cash on hand, how likely you are to sell your home in the next few years, and how refinancing might effect your taxes. Call us at (972) 292-0448 to get you started.

Curious about refinancing? Call us at (972) 292-0448.

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