When is Refinancing Worth it?
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In the market for a mortgage loan? We will be glad to assist you! Call us at 269-282-1612. Ready to begin? Apply Online Now.
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Have you ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least two points below your present one? Perhaps several years ago that was wise advice, but since refinance costs have been falling recently, it could be a good time to look into it. A refinanced mortgage loan is often worth its cost many times over, factoring in the advantages that may come, in addition to a reduced interest rate.
Advantages of Refinancing
When you refinance, you may be able to lower the interest rate and mortgage payment , perhaps considerably. You may also have the ability to "cash out" a portion of your home equity, that you can use to consolidate debt, add on to your home, or take a vacation. You might have the option to refinance to a shorter-term mortgage, enabling you to build up your home equity faster.
The Cost
Of course, you'll have some fees and expenses during the process of refinancing. You will be charged the same kinds of fees as with your present home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying points can result in a lower interest rate. The amount you'll save over the life of the mortgage might be substantial if you've paid up front about three percent of the new loan total. We recommend that you consult with a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.
Another thing about taxes is that when your interest rate is lowered, it follows that you'll also be lowering the interest amount that you'll be able to deduct from your taxes. This is another cost that borrowers take into account. Call us at 269-282-1612 to help you do the math.
Ultimately, for most the total of up-front costs to refinance are 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 cash on hand. Call us at 269-282-1612 to get you started.
Want to know more about refinancing your home? Give us a call: 269-282-1612.
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