Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points lower than your present rate? That may have been true years ago, but with refinancing dropping in cost recently, it's never the wrong time to consider a new loan! A refinanced mortgage may be worth its cost many times over, because of the advantages that it brings, as well as a reduced interest rate.
When you refinance, you may have the ability to lower your interest rate and monthly payment amount, perhaps considerably. You may also have the option to "cash out" some of your home equity, which you will be able use to take care of higher interest debts, make home improvements, or take a vacation. With reduced rates, you may also be able to build your home equity more quickly by switching to a shorter-term loan.
As you probably expect, you will have to pay for your the refinance process. You'll have the same kinds of fees as you did with your existing mortgage. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could offer to pay discount points (prepaid interest) to get a better interest rate. When you pay (on average) 3% of the mortgage loan amount up front, the savings for the life of the new mortgage loan can be substantial. We recommend that you talk to a tax professional before acting on hear-say that these paid points can be deducted on your taxes.
Another thing about taxes is that if you lower your interest rate, naturally you'll also be lowering the paid interest amount that you will be able to deduct on your federal income taxes. This is one more expense that borrowers take into account. We can help you do the math! Call us at (720) 550-4235.
Most borrowers find that the savings per month quickly outweigh the up-front expenses of refinancing. We will work with you to figure out which mortgage loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing could effect your taxes. Call us at (720) 550-4235 to get started.
Curious about refinancing your home? Call us: (720) 550-4235.