Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least 2 points under your existing rate? That may have been accurate a while back, but with the fact that refinancing has been costing less over the last few years, it is a good time to think about a new loan! Refinancing your loan has a variety of benefits that will often make it worth the initial expenditure several times over.
You may be able to bring down your interest rate (sometimes significantly) and make smaller monthly payments with your refinanced mortgage. Additionally, you may be given the option of tapping into the equity in your house by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With reduced rates, you may also be able to build your home equity more quickly by changing to a shorter term loan.
Expenses and Fees
Of course, you'll have to pay for the the refinance process. With your refinance, you are paying for most of the same things you were charged for at the time you got your original mortgage. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might look into paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the refinanced mortgage can be significant. You might have heard that the points may be tax deductible, but as tax regulations are ever-changing, we urge you to consult a tax professional before making any decisions based on this.
One more expense that a borrower may consider is that a lower rate of interest will lower the interest amount you'll deduct from your taxes. Call us at 818-999-6444 to help you do the math.
In the end, for most borrowers the total of initial costs to refinance are made up soon in savings each month. We can help you find out your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 818-999-6444 to get you started.
Curious about refinancing your home? Call us at 818-999-6444.