Weighing the Options of Refinancing

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Ever hear the old rule of thumb that says you should only consider refinancing if your new interest rate is at least 2 points below your existing rate? That might have been true years ago, but with refinancing dropping in cost recently, it's a good time to consider a new mortgage loan! Refinancing has various advantages that can make it worth the up-front cost several times over.


You might be able to bring down your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced loan. You may also be able to "cash out" a portion of the built-up equity in your residence, which you may use to take care of higher interest debts, improve your home, or take a vacation. With reduced rates, you may also get the chance to build your home equity more quickly by moving to a shorter term mortgage loan.

Fees and Expenses

As you probably know, you will have some fees and expenses during the the refinance process. You will have the same types of fees as you did with your existing mortgage. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying points can result in a lower interest rate. Your savings over the life of the mortgage loan might be substantial if you have paid up front about three percent of the new loan balance. You may be told that points can be tax deductible, but because tax regulations are ever-changing, please speak with your tax professional before considering this in your calculations.

Another expense that a borrower may consider is that a lower rate of interest will lower the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at 9722920448.

In the end, for most people the amount of initial costs to refinance are paid back soon in monthly savings. We will help you determine which program is best for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and how refinancing could effect your taxes. Call us at 9722920448 to get started.

Want to know more about refinancing? Give us a call at 9722920448.

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