Weighing the Options of Refinancing

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Some have said that only in the case your new interest will be at least 2 points below your current rate, should you refinance your mortgage. That might have been true a while back, but as refinancing has been costing less in recent years, it is a good time to consider a new loan! Refinancing has various advantages that can make it worth the up-front cost many times over.

Advantages

When you refinance, you might be able to reduce your interest rate and mortgage payment amount, perhaps significantly. You could also be able to "cash out" a portion of your home equity, that you may use to take care of higher interest debts, make home improvements, or finance a vacation. You may be able to refinance to a shorter-term mortgage, giving you the ability to build your home equity faster.

Fees and Expenses

All these benefits do cost something, though. You'll have the same types of fees as with your existing home loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might look into paying points to reduce your interest rate. When you pay (on average) three percent of the loan amount up front, your savings for the life of the refinanced mortgage can be substantial. You might have heard that points can be deducted on your income taxes, but because tax regulations are difficult to keep up with, we urge you to consult a tax professional before considering this in your calculations.

Another thing about taxes is that once you bring down your interest rate, it follows that you'll also be lowering the interest amount that you can deduct on your federal income taxes. This is another cost that borrowers consider. We can help you do the math! Call us at (972)991-0080.

Most people find that the savings each month quickly outweigh the up-front expenses of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at (972)991-0080 to get you started.

Curious about refinancing? Call us: (972)991-0080.

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