Weighing the Options of Refinancing

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Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least two points below your existing rate? Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it could be time to take a serious look. A refinance is often worth its cost many times over, factoring in the advantages that it brings, along with a reduced interest rate.

Benefits

When you refinance, you may be able to reduce your interest rate and mortgage payment , sometimes significantly. You could also have the ability to "cash out" a portion of the built-up equity in your residence, that you are able use to consolidate debts, improve your home, or take a vacation. You may be able to refinance to a shorter-term mortgage program, enabling you to add to your home equity faster.

The Cost

Of course, you will have some fees and expenses during your the refinance process. With your refinance, you're paying for basically the same things you were charged for when you got your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You could offer to pay points (prepaid interest) to attain a more favorable rate of interest. When you pay (on average) 3% of the loan amount at the start, your savings for the life of the refinanced mortgage loan can be significant. You might have heard that these points can be tax deductible, but since tax regulations are ever-changing, we urge you to speak with a tax professional before considering this in your calculations.

An additional expense that borrowers may consider is that a lower rate of interest will reduce the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at (321) 777-7277.

Most people find that the monthly savings quickly outweigh the initial cost of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at (321) 777-7277 to get started.

Curious about refinancing your home? Call us at (321) 777-7277.

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