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 loan. That may have been accurate a while back, but with refinancing dropping in cost over the last few years, it is never the wrong time to think about a new loan! Refinancing your mortgage has some advantages that can make it worth the up-front cost many times over.
Advantages of Refinancing
You could be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage. You also may have the option of tapping into the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build your home equity faster by moving to a shorter term loan.
Expenses and Fees
All of these benefits do come with some expense, though. You'll have to pay the same sort of fees as you did with your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can result in a better interest rate. Your savings on the life of the mortgage may be significant if you have paid up front about 3% of the new loan total. We recommend that you consult with a tax professional before acting on hear-say that these paid points can be deducted on your taxes.
Speaking of taxes, if you bring down your interest rate, of course you'll also be reducing the interest amount that you will be able to deduct on your taxes. This is one more expense that some borrowers take into consideration. We can help you do the math! Call us at (610) 889-7467.
Most people find that the savings per month quickly balance out the up-front expenses of refinancing. We will help you determine what mortgage program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing will have on your taxes. Call us at (610) 889-7467 to get you started.
Want to know more about refinancing your home? Give us a call at (610) 889-7467.