Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only consider refinancing if your new interest rate will be at least 2 points under your existing one? Perhaps several years ago that was good advice, but since refinance costs have been falling recently, it could be time to look into it. A refinance is often worth its cost several times over, because of the benefits that come, in addition to a reduced interest rate.
Benefits
When you refinance, you may have the ability to reduce the interest rate and mortgage payment , sometimes considerably. You also may be given the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity faster.
The Cost
Of course, you'll have to pay for the the refinance process. You'll be charged the same types of fees as with your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might offer to pay points (prepaid interest) to gain a lower rate of interest. Your savings on the life of the loan could be substantial if you've paid up front about three percent of the new loan total. You might hear that the points can be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to speak with a tax professional before considering this in your calculations.
One more expense that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at 770-792-7979.
Most borrowers find that the savings per month outweigh the initial cost of a refinance. We will work with you to determine which loan program is right for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and how refinancing might effect your taxes. Call us at 770-792-7979 to get you started.
Want to know more about refinancing? Call us at 770-792-7979.
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