When is Refinancing Worth it?
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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it could be a good time to look into it. A refinanced mortgage loan can be worth its cost several times over, considering the benefits that it brings, in addition to a reduced interest rate.
Advantages of Refinancing
You might be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with a refinanced loan. Additionally, you might have the option of tapping into the equity in your home by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build up home equity faster by switching to a shorter-term mortgage.
As you probably know, you'll have to pay for the process of refinancing. You'll be charged the same sort of fees as you did with your existing mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might consider paying points to get a better interest rate. Your savings over the life of the loan might be significant if you've paid up front about 3% of the new loan total. You may be told that points can be tax deductible, but because tax regulations are ever-changing, we urge you to consult with a tax professional before making decisions based on this.
Speaking of taxes, when you lower your interest rate, naturally you'll also be lowering the interest amount that you'll be able to deduct on your taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at 703-288-0777.
Most people find that the savings per month quickly outweigh the up-front expenses of refinancing. We will help you figure out what mortgage program is perfect for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing will effect your taxes. Call us at 703-288-0777 to get started.
Want to know more about refinancing? Call us: 703-288-0777.