It has been said that only if your new interest is at least two points under your current rate, should you refinance your loan. Perhaps several years ago that was sage advice, but since refinance costs have been falling recently, it may be a good time to take a serious look. Refinancing your mortgage has some benefits that can make it worth the initial cost many times over.
When you refinance, you might have the ability to lower the interest rate and monthly payment , sometimes considerably. You also could be given the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build up home equity more quickly by moving to a shorter term loan.
All these advantages do come with some expense, though. You'll have the same kinds of expenses and fees as with your current mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
You might consider paying points to reduce your interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the life of the refinanced mortgage can be substantial. Please consult with a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
Speaking of taxes, if your interest rate is reduced, naturally you will also be lowering the paid interest amount that you'll be able to deduct from your taxes. This is one more cost that borrowers take into consideration. Call us at 214-396-3650 to help you do the math.
Most borrowers find that the monthly savings balance out the initial cost of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your cash on hand. Call us at 214-396-3650 to get you started.
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