Is Refinancing Worth the Cost?
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Looking for a mortgage loan? We will be glad to assist you! Call us at (585) 282-0960. Ready to begin? Apply Here.
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Have you ever heard the old rule of thumb that says you should only refinance if the new interest rate will be at least two points under your existing one? Maybe several years ago that was sage advice, but as refinance costs have been falling recently, it may be time to take a serious look. Refinancing has a number of benefits that will often make it worth the initial cost several times over.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced mortgage loan. You could also be able to "cash out" some of the built-up equity in your residence, which you are able use to consolidate debts, add on to your home, or finance a vacation. With lower rates, you may also get the chance to build up home equity more quickly by moving to a shorter term mortgage.
Expenses and Fees
As you probably know, you'll have to pay for your the refinance process. With your refinance, you are paying for many of the same things you were charged for at the time you obtained your existing mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can get you a lower interest rate. Your savings over the life of the mortgage may be significant if you have paid up front about 3% of the new loan total. You may hear that points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, please consult a tax professional before depending on this.
Another thing about taxes is that when you bring down your interest rate, naturally you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at (585) 282-0960.
Ultimately, for most borrowers the amount of up-front costs to refinance will be made up soon in savings each month. We'll help you figure out which loan program is perfect for you, taking into account your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing will effect your taxes. Call us at (585) 282-0960 to get you started.
Want to know more about refinancing? Call us at (585) 282-0960.