Weighing the Options of Refinancing
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Have you ever heard the old rule of thumb that says you should only refinance if your new interest rate is at least 2 points lower than your present rate? That might have been valid a while back, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage loan! Refinancing has various advantages that often make it worth the up-front cost many times over.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced mortgage. You also might be given the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity quicker.
Expenses and Fees
As you probably expect, you will have to pay for the process of refinancing. With your refinance, you're paying for most of the same things you were charged for when you got your original mortgage. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying points can get you a lower interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the life of the refinanced loan can be substantial. Please talk to a tax professional before acting on rumors that the points paid may be deducted on your taxes.
Another thing about taxes is that once you bring down your interest rate, naturally you will also be reducing the paid interest amount that you can deduct from your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at (214) 448-4641.
Ultimately, for most the amount of initial costs to refinance are made up soon in monthly savings. We can help you figure out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at (214) 448-4641 to get you started.
Want to know more about refinancing your home? Call us at (214) 448-4641.