Is Refinancing Worth the Cost?
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Are you looking for a mortgage? We'll be glad to talk about our many mortgage solutions! Call us at 954-359-3000. Want to get started? Apply Now.
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Have you ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least 2 points lower than your present rate? Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it may be time to take a serious look. Refinancing has a number of advantages that often make it worth the initial expenditure many times over.
Benefits
When you refinance, you could be able to reduce your interest rate and mortgage payment , sometimes by a lot. You might also have the option to "cash out" some of your equity, which you are able use to consolidate debts, improve your home, or take a vacation. With reduced rates, you might also get the chance to build up home equity faster by changing to a shorter term mortgage.
The Cost
All of these advantages do cost something, though. With your refinance, you're paying for basically the same things you paid for at the time you obtained your existing mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might investigate paying points to get a reduced interest rate. The money you'll save on the life of the loan may be significant if you've paid up front about 3% of the new loan total. Please consult with a tax professional before acting on advice that these points paid can be deducted on your federal income taxes.
Another thing about taxes is that if your interest rate is reduced, of course you will also be reducing the interest amount that you can deduct from your taxes. This is another expense that some borrowers take into consideration. Call us at 954-359-3000 to help you do the math.
All things considered, for most the amount of up-front costs to refinance will be paid back very quickly in monthly savings. We can help you figure out your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 954-359-3000 to get started.
Curious about refinancing your home? Call us: 954-359-3000.
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