Is Refinancing Worth the Cost?
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Shopping for a mortgage? We can assist you! Call us at 916-989-6222. Ready to begin? Apply Here.
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It has been said that only in the case your new interest will be at least two points lower, should you refinance your loan. Maybe that was good advice several years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing your loan has some benefits that will often make it worth the initial expenditure a few times over.
Advantages of Refinancing
You might be able to lower your interest rate (sometimes substantially) and make smaller mortgage payments with a refinanced mortgage loan. You could also be able to "cash out" some of the built-up equity in your home, that you are able use to take care of higher interest debts, make home improvements, or finance a vacation. With reduced interest rates, you might also be able to build up home equity faster by changing to a shorter-term loan.
The Cost
All of these benefits do cost something, though. You'll have to pay the same sort of fees as with your existing mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying points can result in a better interest rate. When you pay (on average) 3% of the mortgage loan amount up front, the savings for the life of the new loan can be great. Please talk to a tax professional before acting on rumors that any paid points can be deducted on your federal income taxes.
Another expense that borrowers might take into account is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 916-989-6222.
Most borrowers find that the monthly savings balance out the up-front cost of a refinance. We will help you figure out which loan program is perfect for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing may effect your taxes. Call us at 916-989-6222 to get you started.
Curious about refinancing your home? Call us at 916-989-6222.
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