Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only refinance if your new interest rate will be at least two points below your existing one? That may have been sound advice a while back, but with refinancing dropping in cost in recent years, it's a good time to explore the options of a new mortgage loan! A refinance can be worth its cost several times over, considering the advantages that may come, as well as a reduced interest rate.
Advantages of Refinancing
You may be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced loan. You also may have the option of tapping into the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You may be able to refinance to a shorter-term mortgage program, enabling you to build your equity quicker.
Fees and Expenses
As you probably expect, you will have some fees and expenses during the process of refinancing. You will have the same sort of expenses and fees as you did with your present mortgage. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
Paying discount points can result in a lower interest rate. Your savings over the life of the mortgage loan may be significant if you have paid up front about three percent of the new loan balance. You might hear that points may be tax deductible, but as tax regulations are ever-changing, we urge you to consult your tax professional before considering this in your calculations.
An additional expense that a borrower may consider is that a reduced rate of interest will lower the interest amount you'll be able to deduct from your federal income taxes. Call us at (678) 336-5200 to help you do the math.
In the end, for most people the amount of up-front costs to refinance will be made up very quickly in monthly savings. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at (678) 336-5200 to get you started.
Curious about refinancing your home? Give us a call: (678) 336-5200.