Is Refinancing Worth the Cost?
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Have you ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least two points below your present one? That might have been valid years ago, but as refinancing has been costing less recently, it is never the wrong time to explore the options of a new mortgage! Refinancing has a number of benefits that can make it worth the up-front expenditure several times over.
When you refinance, you could be able to lower the interest rate and monthly mortgage payment , sometimes considerably. You also might have the option of tapping into the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build your home equity faster by changing to a shorter-term mortgage.
As you probably know, you will have some fees and expenses during your process of refinancing. You'll be charged the same sort of expenses and fees as with your current mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying discount points can help you get a lower interest rate. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the refinanced mortgage can be significant. You may have heard that points can be deducted on your income taxes, but since tax regulations can be ever-changing, please consult your tax professional before depending on this.
Another thing about taxes is that if your interest rate is lowered, naturally you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another expense that borrowers consider. We can help you do the math! Call us at 516-431-2009.
Most borrowers find that the monthly savings outweigh the initial cost of refinancing. We'll help you find out which loan program is right for you, considering your cash on hand, the likelihood of selling your residence in the near future, and how refinancing can effect your taxes. Call us at 516-431-2009 to get started.