Weighing the Options of Refinancing

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Ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least 2 points below your present one? Maybe several years ago that was sage advice, but as refinance costs have been falling recently, it may be a good time to look into it. Refinancing has some advantages that will often make it worth the up-front cost many times over.

Advantages

You may be able to lower your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced mortgage. You also might have the option of tapping into the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You could be able to refinance to a shorter-term mortgage program, enabling you to build up your home equity faster.

Expenses and Fees

Of course, you will have some fees and expenses during your the refinance process. With your refinance, you're paying for basically the same things you were charged for during your current mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Do the Math

You might investigate paying points to be given a reduced interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the new loan can be great. Please talk to a tax professional before acting on advice that the paid points can be deducted on your taxes.

One more cost that a borrower may consider is that a lower rate of interest will lower the interest amount you will be able to deduct on your taxes. Call us at 469-640-0400 to help you do the math.

Most borrowers find that the savings each month quickly balance out the initial cost of a refinance. We can help you figure out your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at 469-640-0400 to get you started.

Curious about refinancing your home? Give us a call: 469-640-0400.

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