Weighing the Options of Refinancing

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Some have said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. That could have been accurate years ago, but with the fact that refinancing has been costing less over the last few years, it's never the wrong time to consider a new mortgage! Refinancing your mortgage loan has some advantages that can make it worth the up-front expenditure many times over.


You may be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced loan. You might also have the option to "cash out" some of your equity, that you will be able use to consolidate debt, improve your home, or take a vacation. You may have the option to refinance to a shorter-term mortgage program, giving you the ability to add to your home equity quicker.

The Cost

As you probably expect, you will have to pay for your process of refinancing. You'll have to pay the same sort of fees as you did with your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to be given a lower interest rate. The money you will save over the life of the mortgage loan may be substantial if you have paid up front about three percent of the new loan balance. Please consult a tax professional before acting on rumors that any points paid can be deducted on your taxes.

Speaking of taxes, when you reduce your interest rate, naturally you will also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers consider. Call us at 504-866-5626 to help you do the math.

Most borrowers find that the savings per month balance out the up-front cost of a refinance. We will work with you to determine what mortgage program is the right fit for you, considering your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing will have on your taxes. Call us at 504-866-5626 to get started.

Curious about refinancing? Give us a call: 504-866-5626.

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