Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points below your existing one? That may have been sound advice a while back, but with the fact that refinancing has been costing less recently, it is a good time to explore the options of a new loan! Refinancing your mortgage has a number of advantages that can make it worth the initial expenditure many times over.
When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment , perhaps considerably. Additionally, you might be given the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also get the chance to build your home equity more quickly by changing to a shorter term loan.
As you probably expect, you will have to pay for your process of refinancing. You'll be charged the same kinds of expenses and fees as with your current home loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can get you a lower interest rate. Your savings over the life of the loan may be substantial if you have paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on hear-say that these points paid may be deducted on your taxes.
An additional expense that borrowers may consider is that a lower interest rate will lower the interest amount you'll be able to deduct from your taxes. Call us at 703.255-5810 to help you do the math.
All things considered, for most the total of initial costs to refinance will be made up soon in monthly savings. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your cash on hand. Call us at 703.255-5810 to get started.
Curious about refinancing your home? Call us at 703.255-5810.