When you are overwhelmed with so many choices, it may seem like there are even more refinance programs than borrowers! – Is Refinancing Worth the Cost?
Ever hear the pearl of wisdom that says you should only consider refinancing if your new interest rate will be at least two points below your present one? That might have been valid years ago, but with refinancing dropping in cost recently, it is never the wrong time to think about a new mortgage! Refinancing has various advantages that will often make it worth the initial expenditure a few times over.
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When you refinance, you might be able to reduce your interest rate and monthly mortgage payment , sometimes considerably. Additionally, you might have the option of pulling out some of your home equity by “cashing out” some funds to remodel your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your home equity quicker.
Fees and Expenses
All of these advantages do come with some expense, though. You will have to pay the same kinds of fees as with your present home loan. Included in your costs will probably be an appraisal, underwriting fees, lender’s title insurance, settlement costs, and other fees.
Do the Math
You might consider paying points to be given a better interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the term of the new loan can be great. We recommend that you consult with a tax professional before acting on advice that any points paid may be deducted on your taxes.
Speaking of taxes, when your interest rate is reduced, of course you will also be reducing the paid interest amount that you will be able to deduct from your taxes. This is one more cost that borrowers take into consideration. Call us at (941) 954-4252 to help you do the math.
In the end, for most the total of initial costs to refinance are made up very quickly in monthly savings. We will help you figure out which loan program is the ideal fit for you, looking at your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing can effect your taxes. Call us at (941) 954-4252 to get you started.