Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least two points lower, should you refinance your loan. That may have been true years ago, but with the fact that refinancing has been costing less recently, it's never the wrong time to explore the options of a new loan! A refinanced mortgage is often worth its cost several times over, considering the benefits that come, as well as a lower interest rate.
When you refinance, you could be able to reduce the interest rate and monthly mortgage payment , sometimes considerably. You may also have the option to "cash out" a portion of the built-up equity in your residence, which you are able use to take care of higher interest debts, make home improvements, or finance a vacation. With reduced rates, you might also get the chance to build up home equity faster by changing to a shorter-term mortgage loan.
As you probably expect, you'll have to pay for the the refinance process. When you refinance, you are paying for basically the same things you paid for during your current mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might look into paying points to reduce your interest rate. If you pay (on average) three percent of the loan amount up front, the savings for the term of the new loan can be great. We recommend that you consult with a tax professional before acting on rumors that any points paid can be deducted on your taxes.
One more cost that borrowers might consider is that a reduced interest rate will reduce the interest amount you'll deduct on your taxes. Call us at 504-866-5626 to help you do the math.
Most people find that the savings per month balance out the initial cost of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 504-866-5626 to get started.
Curious about refinancing? Give us a call: 504-866-5626.
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