Weighing the Options of Refinancing

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Some have said that only if your new interest will be at least two points below your current rate, should you refinance your mortgage. That might have been sound advice years ago, but as refinancing has been costing less in recent years, it's never the wrong time to consider a new loan! Refinancing your loan has a variety of benefits that will often make it worth the initial expenditure several times over.


You could be able to lower your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced mortgage. You could also have the option to "cash out" some of the built-up equity in your home, that you will be able use to consolidate debt, improve your home, or finance a vacation. With lower rates, you might also be able to build your home equity more quickly by switching to a shorter-term mortgage.

The Cost

As you probably know, you'll have some fees and expenses during your process of refinancing. When you refinance, you're paying for a lot of the same things you were charged for at the time you got your current mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying discount points can get you a lower interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the life of the new loan can be substantial. We recommend that you talk to a tax professional before acting on rumors that the points paid may be deducted on your taxes.

Another cost that borrowers might consider is that a lower interest rate will lower the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at 703.255-5810.

Most people find that the monthly savings outweigh the initial expenses of refinancing. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 703.255-5810 to get you started.

Want to know more about refinancing? Call us: 703.255-5810.

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