Is Refinancing Worth the Cost?

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Ever hear the old rule of thumb that says you should only refinance if your new interest rate will be at least two points under your current rate? That might have been accurate years ago, but since refinancing has been costing less recently, it is a good time to explore the options of a new mortgage loan! Refinancing your mortgage loan has a number of advantages that can make it worth the initial cost several times over.

Benefits

When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment , sometimes considerably. You could also have the option to "cash out" a portion of the built-up equity in your home, which you are able use to take care of higher interest debts, improve your home, or finance a vacation. With lower rates, you might also get the chance to build up home equity faster by switching to a shorter-term loan.

The Cost

Of course, you will have to pay for the the refinance process. You will be charged the same sort of fees as you did with your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can result in a lower interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, the savings for the term of the refinanced mortgage can be significant. You might hear that these points can be deducted on your income taxes, but because tax regulations are ever-changing, please speak with your tax professional before considering this in your calculations.

Another thing about taxes is that once your interest rate is lowered, naturally you'll also be lowering the interest amount that you can deduct on your taxes. This is another expense that some borrowers consider. We can help you do the math! Call us at 352-347-3303.

Most people find that the monthly savings quickly balance out the initial cost of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at 352-347-3303 to get started.

Want to know more about refinancing your home? Give us a call: 352-347-3303.

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