Is Refinancing Worth the Cost?
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Ever hear the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points under your present rate? Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage loan is often worth its cost many times over, because of the advantages that may come, as well as a lower interest rate.
When you refinance, you may be able to reduce the interest rate and monthly payment amount, sometimes significantly. Additionally, you might have the option of tapping into the equity in your property by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage program, enabling you to build up your equity faster.
Expenses and Fees
All these benefits do cost something, though. With your refinance, you are paying for basically the same things you paid for during your current mortgage loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can help you get a better interest rate. Your savings on the life of the loan might be substantial if you've paid up front about three percent of the new loan total. Please consult a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
Another expense that a borrower might take into account is that a lower interest rate will lower the interest amount you will deduct on your federal income taxes. Call us at (207) 571-8034 to help you do the math.
In the end, for most borrowers the total of initial costs to refinance are paid back soon in monthly savings. We will help you determine what 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 what effect refinancing could have on your taxes. Call us at (207) 571-8034 to get you started.
Curious about refinancing your home? Call us: (207) 571-8034.