When is Refinancing Worth it?

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It has been said that only if your new interest will be at least two 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 may be time to take a serious look. A refinanced mortgage loan may be worth its cost many times over, factoring in the advantages that it brings, as well as a reduced interest rate.

Advantages of Refinancing

When you refinance, you may be able to lower the interest rate and mortgage payment amount, sometimes by a lot. You also may have the option of pulling out some of the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage, giving you the ability to build your equity faster.

Expenses and Fees

Of course, you will have some fees and expenses during your process of refinancing. You'll be charged the same sort of fees as with your present mortgage loan. These might include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Do the Math

You might consider paying points to receive a reduced interest rate. The amount you will save on the life of the loan could be substantial if you've paid up front about three percent of the new loan balance. Please consult a tax professional before acting on hear-say that the paid points may be deducted on your taxes.

One more cost that a borrower may take into account is that a reduced interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at (818)645-7035 to help you do the math.

In the end, for most borrowers the total of up-front costs to refinance will be made up soon in monthly savings. We will work with you to find out which mortgage program is right for you, looking at your cash on hand, how likely you are to sell your home in the next few years, and the effect refinancing may have on your taxes. Call us at (818)645-7035 to get you started.

Curious about refinancing your home? Call us: (818)645-7035.

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