Weighing the Options of Refinancing
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Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate is at least two points lower than your existing rate? Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it could be time to look into it. A refinanced mortgage is often worth its cost several times over, because of the benefits that it brings, in addition to a reduced interest rate.
Advantages of Refinancing
When you refinance, you might be able to lower the interest rate and monthly payment , perhaps by a lot. You also may be given the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to build up your home equity quicker.
Expenses and Fees
Of course, you'll have some fees and expenses during your process of refinancing. When you refinance, you're paying for a lot of the same things you were charged for at the time you got your existing mortgage loan. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay discount points (prepaid interest) to get a better interest rate. The money you'll save over the life of the loan might be substantial if you have paid up front about 3% of the new loan balance. Please talk to a tax professional before acting on rumors that any points paid can be deducted on your taxes.
Speaking of taxes, if you bring down your interest rate, naturally you will also be reducing the interest amount that you'll be able to deduct on your taxes. This is one more cost that borrowers take into consideration. We can help you do the math! Call us at 918-748-4470/877-748-4470.
Most people find that the monthly savings outweigh the initial expenses of refinancing. We can help you explore what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at 918-748-4470/877-748-4470 to get you started.
Want to know more about refinancing? Call us: 918-748-4470/877-748-4470.