Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least 2 points under your current rate, should you refinance your mortgage. Maybe several years ago that was good advice, but since refinance costs have been falling recently, it could be time to take a serious look. Refinancing has a variety of benefits that will often make it worth the up-front expenditure a few times over.
You may be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage. You may also have the option to "cash out" a portion of the built-up equity in your home, that you are able use to take care of higher interest debts, make home improvements, or plan a vacation. With reduced interest rates, you may also be able to build your home equity faster by changing to a shorter term mortgage.
Expenses and Fees
Of course, you will have to pay for the the refinance process. When you refinance, you're paying for many of the same things you paid for during your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might consider paying points to reduce your interest rate. Your savings on the life of the mortgage loan may be substantial if you've paid up front about three percent of the new loan balance. Please consult a tax professional before acting on rumors that the points paid can be deducted on your federal income taxes.
An additional cost that borrowers might consider is that a lower rate of interest will reduce the interest amount you'll be able to deduct from your federal income taxes. We can help you do the math! Call us at (925) 627-1400.
Most borrowers find that the savings per month outweigh the initial cost of a refinance. We'll help you find out what mortgage loan program is perfect for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and the effect refinancing may have on your taxes. Call us at (925) 627-1400 to get started.
Curious about refinancing your home? Call us: (925) 627-1400.