Weighing the Options of Refinancing
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Some have said that only if your new interest is at least two points lower, should you refinance your mortgage. That may have been sound advice years ago, but with refinancing dropping in cost recently, it is a good time to consider a new loan! Refinancing your mortgage loan has a variety of advantages that will often make it worth the up-front cost several times over.
Benefits
You could be able to lower your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced mortgage loan. You might also be able to "cash out" some of your home equity, which you are able use to consolidate debts, 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.
Fees and Expenses
All of these benefits do cost something, though. You'll pay the same kinds of expenses and fees as with your present mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
You might consider paying points to reduce your interest rate. Your savings on the life of the mortgage loan might be substantial if you've paid up front about 3% of the new loan total. You might hear that the points can be tax deductible, but as tax regulations are ever-changing, we urge you to consult with your tax professional before depending on this.
Another thing about taxes is that when your interest rate is reduced, it follows that you'll also be lowering the interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers consider. Call us at 760-415-2345 to help you do the math.
Most borrowers find that the savings per month quickly outweigh the up-front expenses of refinancing. We can help you explore 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 money on hand. Call us at 760-415-2345 to get started.
Want to know more about refinancing your home? Give us a call at 760-415-2345.
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