When is Refinancing Worth it?
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It has been said that only when your new interest will be at least 2 points below your current rate, should you refinance your mortgage. That could have been accurate years ago, but since refinancing has been costing less in recent years, it's a good time to think about a new loan! Refinancing your mortgage loan has a variety of advantages that often make it worth the initial expenditure several times over.
Advantages
You could be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with your refinanced mortgage. You might also have the ability to "cash out" some of the built-up equity in your residence, that you are able use to take care of higher interest debts, make home improvements, or finance a vacation. You could be able to refinance to a shorter-term mortgage, enabling you to build your home equity quicker.
Expenses and Fees
All of these benefits do cost something, though. You will be charged the same kinds of fees as with your existing home loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can get you a lower interest rate. Your savings over the life of the mortgage might be substantial if you've paid up front about three percent of the new loan total. We recommend that you talk to a tax professional before acting on rumors that the points paid may be deducted on your taxes.
Another thing about taxes is that when you bring down your interest rate, of course you'll also be lowering the interest amount that you can deduct from your federal income taxes. This is one more cost that borrowers take into account. We can help you do the math! Call us at (405) 822-1957.
Most people find that the monthly savings balance out the up-front expenses of a refinance. We'll work with you to determine what loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at (405) 822-1957 to get you started.
Curious about refinancing your home? Call us at (405) 822-1957.