Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? Tom Mencke would be glad to assist you! Give him a call at 1-708-647-5240. Ready to get started? Apply Here. |
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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your loan. That might have been good advice a while back, but as refinancing has been costing less recently, it is a good time to explore the options of a new mortgage! Refinancing has a number of benefits that can make it worth the up-front expenditure many times over.
Benefits from Refinancing
When you refinance, you might have the ability to reduce the interest rate and monthly mortgage payment , sometimes by a lot. You also might be given the option of pulling out some of your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also be able to build up home equity faster by moving to a shorter-term mortgage loan.
Fees and Expenses
All these advantages do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for during your existing mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay points (prepaid interest) to gain a better interest rate. The amount you will save on the life of the loan could be significant if you have paid up front about 3% of the new loan balance. You might be told that points can be deducted on your income taxes, but because tax regulations can be difficult to keep up with, we urge you to consult a tax professional before making decisions based on this.
Another thing about taxes is that if you bring down your interest rate, naturally you will also be lowering the interest amount that you will be able to deduct on your taxes. This is one more cost that borrowers consider. Tom can help you do the math! Call him at 1-708-647-5240.
Most people find that the savings each month outweigh the up-front cost of refinancing. We'll work with you to figure out what mortgage program is best for you, considering your cash on hand, the likelihood of selling your home in the next few years, and how refinancing can effect your taxes.
Curious about refinancing your home? Give Tom a call at 1-708-647-5240.
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