Is Refinancing Worth the Cost?
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Searching for mortgage advice? We'll be glad to answer your questions about your mortgage needs! Call us at (203) 284-8022. Ready to begin? Apply Now.
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It has been said that only when your new interest will be at least two points below your current rate, should you refinance your mortgage. Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be time to take a serious look. Refinancing has a variety of benefits that often make it worth the initial expenditure many times over.
Benefits
You might be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage. Additionally, you might have the option of pulling out some of the equity in your house by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also be able to build up home equity more quickly by moving to a shorter-term mortgage.
Expenses and Fees
All of these benefits do come with some expense, though. You'll pay the same sort of fees as with your existing home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
Paying discount points can result in a better interest rate. The money you will save over the life of the mortgage could be significant if you have paid up front about 3% of the new loan balance. You may be told that the points may be tax deductible, but because tax regulations are difficult to keep up with, please speak with your tax professional before depending on this.
Speaking of taxes, when your interest rate is reduced, naturally you'll also be lowering the interest amount that you can deduct on your taxes. This is another expense that borrowers take into account. We can help you do the math! Call us at (203) 284-8022.
In the end, for most the total of up-front costs to refinance will be paid back soon in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your money on hand. Call us at (203) 284-8022 to get started.
Curious about refinancing? Give us a call: (203) 284-8022.
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