Is Refinancing Worth the Cost?

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It has been said that only when your new interest is at least two points lower, should you refinance your loan. Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing your mortgage loan has a variety of advantages that will often make it worth the up-front cost a few times over.

Advantages

You could be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced mortgage. You also could have the option of tapping into the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage loan, giving you the ability to add to your home equity quicker.

Fees and Expenses

All these benefits do cost something, though. You'll be charged the same sort 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 expenses.

Do the Math

You might consider paying points to get a reduced interest rate. If you pay (on average) 3% of the loan amount at the start, the savings for the life of the new mortgage can be substantial. You might hear that these points can be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to speak with a tax professional before considering this in your calculations.

One more cost that borrowers might consider is that a reduced interest rate will lower the interest amount you'll deduct on your taxes. Call us at 469-640-0400 to help you do the math.

Most borrowers find that the savings each month balance out the initial cost of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 469-640-0400 to get you started.

Want to know more about refinancing your home? Give us a call: 469-640-0400.

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