Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your loan. That may have been true a while back, but with refinancing dropping in cost recently, it is a good time to explore the options of a new loan! A refinanced mortgage can be worth its cost several times over, considering the advantages that it brings, as well as a lower interest rate.
Benefits from Refinancing
When you refinance, you may be able to lower your interest rate and monthly mortgage payment , sometimes by a lot. You also might have the option of pulling out some of the equity in your house by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. With lower interest rates, you may also get the chance to build your home equity more quickly by changing to a shorter-term mortgage.
Expenses and Fees
All these advantages do cost something, though. You'll have the same kinds of expenses and fees as you did with your existing mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
You could need to pay discount points (prepaid interest) to gain a lower rate of interest. Your savings on 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 talk to a tax professional before acting on advice that any paid points may be deducted on your taxes.
Another cost that borrowers might take into account is that a reduced interest rate will lower the interest amount you will deduct from your taxes. Call us at (302) 765-8089 to help you do the math.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your money on hand. Call us at (302) 765-8089 to get started.
Want to know more about refinancing your home? Call us at (302) 765-8089.
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