When is Refinancing Worth it?

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Some have said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Perhaps that was good advice several years ago, but since refinance costs have been falling recently, it may be time to look into it. Refinancing has some advantages that will often make it worth the initial cost a few times over.

Benefits

When you refinance, you could be able to lower the interest rate and monthly mortgage payment , perhaps considerably. You also might have the option of pulling out some of the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With lower rates, you may also be able to build up home equity faster by moving to a shorter term loan.

The Cost

All these benefits do come with some expense, though. With your refinance, you're paying for most of the same things you were charged for when you got your original mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might look into paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount initially, the savings for the life of the new mortgage loan can be great. Please talk to a tax professional before acting on rumors that any paid points can be deducted on your taxes.

Another cost that borrowers might consider is that a lower rate of interest will lower the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (303) 228-2254.

In the end, for most the amount of initial costs to refinance will be made up soon in monthly savings. We can help you explore what your options are, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at (303) 228-2254 to get started.

Curious about refinancing? Call us at (303) 228-2254.

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