Is Refinancing Worth the Cost?

Curious about refinancing? Give us a call at 888-540-4114.


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Some have said that only if your new interest will be at least two points under your current rate, should you refinance your mortgage. That might have been valid a while back, but with refinancing dropping in cost over the last few years, it’s a good time to explore the options of a new mortgage! Refinancing has various benefits that often make it worth the up-front expenditure a few times over.

Advantages

When you refinance, you might be able to reduce the interest rate and monthly payment amount, perhaps by a lot. You could also be able to “cash out” a portion of the built-up equity in your residence, that you can use to take care of higher interest debts, make home improvements, or take a vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to build your home equity faster.

The Cost

All of these benefits do cost something, though. With your refinance, you are paying for basically the same things you were charged for during your existing mortgage. Among these might be settlement costs, appraisal fees, lender’s title insurance, underwriting expenses, and others.

When you refinance your existing mortgage too soon, there might be a penalty. It all depends on your present mortgage loan agreement. However, this sort of penalty might apply only to the first couple of years of your loan. We’ll help you sort through the details: contact us at 888-540-4114.

Do the Math

You could offer to pay points (prepaid interest) to get a better rate of interest. The amount you will save over the life of the loan may be significant if you’ve paid up front about three percent of the new loan total. You may have heard that points can be tax deductible, but as tax regulations can be difficult to keep up with, please speak with a tax professional before considering this in your calculations.

An additional cost that a borrower might take into account is that a reduced interest rate will lower the interest amount you’ll deduct from your taxes. Call us at 888-540-4114 to help you do the math.

Most people find that the savings per month outweigh the initial cost of a refinance. We’ll help you figure out which program is right for you, considering your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing could have on your taxes. Call us at 888-540-4114 to get started.

Shopping for a mortgage? We will be glad to assist you! Call us at 888-540-4114. Ready to begin? Apply Online Now.

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