Is Refinancing Worth the Cost?
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It has been said that only when your new interest will be at least two points below your current rate, should you refinance your loan. That may have been valid years ago, but with refinancing dropping in cost recently, it's never the wrong time to think about a new loan! Refinancing has a number of advantages that will often make it worth the up-front expenditure several times over.
You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage loan. Additionally, you could have the option of pulling out some of the equity in your property by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to add to your equity faster.
Fees and Expenses
All of these advantages do cost something, though. When you refinance, you're paying for most of the same things you paid for during your original mortgage. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might investigate paying points to reduce your interest rate. Your savings over the life of the mortgage loan could be significant if you have paid up front about 3% of the new loan total. You may have heard that the points can be deducted on your income taxes, but as tax regulations can be ever-changing, please speak with your tax professional before depending on this.
An additional expense that borrowers may consider is that a lower rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at (610) 889-7467.
Most borrowers find that the savings per month quickly balance out the initial expenses of refinancing. We will work with you to determine what program is ideal for you, considering 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 (610) 889-7467 to get you started.
Curious about refinancing? Call us at (610) 889-7467.