Weighing the Options of Refinancing
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It has been said that only if your new interest will be at least 2 points below your current rate, should you refinance your mortgage. That might have been true years ago, but with refinancing dropping in cost in recent years, it's never the wrong time to consider a new mortgage loan! Refinancing has a variety of benefits that often make it worth the initial cost several times over.
You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage. You also might have 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, enabling you to build up your equity quicker.
As you probably know, you will have some fees and expenses during your process of refinancing. You'll have the same sort of fees as with your current mortgage loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
Paying points can result in a lower interest rate. The money you will save over the life of the mortgage loan may be substantial if you've paid up front about 3% of the new loan total. Please talk to a tax professional before acting on hear-say that any points paid may be deducted on your taxes.
Another thing about taxes is that once your interest rate is lowered, of course you'll also be reducing the interest amount that you will be able to deduct from your taxes. This is another cost that borrowers consider. Call us at 952 417 8481 to help you do the math.
Ultimately, for most people the amount of initial costs to refinance are made up very quickly in savings each month. We will work with you to determine what program is right for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and the effect refinancing will probably have on your taxes. Call us at 952 417 8481 to get started.
Want to know more about refinancing? Give us a call: 952 417 8481.