Weighing the Options of Refinancing
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It has been said that only when your new interest is at least two points lower, should you refinance your mortgage. That may have been accurate years ago, but with refinancing dropping in cost over the last few years, it is a good time to think about a new loan! Refinancing has various benefits that can make it worth the initial cost a few times over.
When you refinance, you might be able to lower the interest rate and monthly mortgage payment amount, perhaps significantly. You also might be given the option of tapping into your home equity by "cashing out" some 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 more quickly by changing to a shorter-term loan.
All these advantages do cost something, though. You will be charged the same sort of expenses and fees as with your present mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might think about paying points to reduce your interest rate. When you pay (on average) three percent of the loan amount up front, the savings for the life of the new loan can be significant. You may hear that these points may be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to consult your tax professional before considering this in your calculations.
Speaking of taxes, if you bring down your interest rate, naturally you will also be lowering the interest amount that you will be able to deduct on your federal income taxes. This is one more expense that borrowers take into account. We can help you do the math! Call us at 516-431-2009.
Most people find that the monthly savings quickly outweigh the up-front expenses of refinancing. We will work with you to determine what mortgage loan program is ideal for you, considering your cash on hand, how likely you are to sell your home in the near future, and how refinancing may effect your taxes. Call us at 516-431-2009 to get you started.
Curious about refinancing your home? Call us: 516-431-2009.