Is Refinancing Worth the Cost?
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Have you ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate is at least two points under your present one? Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing your mortgage loan has a number of advantages that will often make it worth the up-front expenditure several times over.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes by a lot) and have smaller monthly payments with your refinanced loan. Additionally, you could have the option of tapping into the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You could have the option to refinance to a shorter-term mortgage, enabling you to build your home equity quicker.
Fees and Expenses
Of course, you will have to pay for the process of refinancing. When you refinance, you are paying for a lot of the same things you paid for when you obtained your current mortgage. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might consider paying points to get a better interest rate. Your savings on the life of the mortgage could be significant if you have paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on rumors that any paid points may be deducted on your taxes.
Another cost that borrowers might consider is that a reduced rate of interest will lower the interest amount you will deduct on your taxes. We can help you do the math! Call us at (925) 560-7644.
Ultimately, for most borrowers the amount of up-front costs to refinance will be paid back soon in monthly savings. We'll help you determine what program is right for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and the effect refinancing could have on your taxes. Call us at (925) 560-7644 to get started.
Want to know more about refinancing your home? Give us a call: (925) 560-7644.