Weighing the Options of Refinancing
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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least 2 points under your existing rate? Maybe that was good advice several years ago, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan is often worth its cost many times over, factoring in the benefits that may come, along with a reduced interest rate.
Benefits
When you refinance, you may have the ability to reduce the interest rate and monthly mortgage payment , sometimes considerably. Additionally, you might have the option of pulling out some of your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your home equity faster.
Fees and Expenses
Of course, you will have to pay for your process of refinancing. With your refinance, you are paying for basically the same things you paid for when you got your existing mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can result in a lower 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. We recommend that you consult with a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
Speaking of taxes, if you lower your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is another expense that borrowers consider. We can help you do the math! Call us at (817) 366-8666.
All things considered, for most borrowers the total of initial costs to refinance are paid back soon in savings each month. We can help you find out your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at (817) 366-8666 to get started.
Want to know more about refinancing? Call us: (817) 366-8666.
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