Is Refinancing Worth the Cost?
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Shopping for a mortgage? We can assist you! Call us at 415.931.2883. Want to get started? Apply Now.
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Some have said that only if your new interest will be at least 2 points below your current rate, should you refinance your mortgage. Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it could be a good time to look into it. Refinancing has a variety of advantages that often make it worth the initial cost many times over.
Benefits
When you refinance, you may have the ability to reduce the interest rate and mortgage payment , perhaps considerably. Additionally, you might have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You may be able to refinance to a shorter-term mortgage, giving you the ability to build up your equity faster.
The Cost
As you probably expect, you will have to pay for the the refinance process. You will pay the same types of fees as with your current mortgage loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might consider paying points to reduce your interest rate. Your savings over the life of the loan may be significant if you've paid up front about 3% of the new loan balance. Please consult with a tax professional before acting on hear-say that these paid points can be deducted on your taxes.
Speaking of taxes, when your interest rate is lowered, it follows that you will also be lowering the paid interest amount that you may deduct from your federal income taxes. This is one more cost that some borrowers take into consideration. Call us at 415.931.2883 to help you do the math.
Most people find that the monthly savings quickly balance out the initial cost of refinancing. We will work with you to find out what mortgage loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the near future, and how refinancing will effect your taxes. Call us at 415.931.2883 to get you started.
Want to know more about refinancing? Call us at 415.931.2883.
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