Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least two points below your current rate, should you refinance your mortgage. That could have been true years ago, but since refinancing has been costing less recently, it's never the wrong time to explore the options of a new mortgage! Refinancing your loan has some benefits that often make it worth the up-front expenditure several times over.
Benefits from Refinancing
When you refinance, you may be able to reduce the interest rate and mortgage payment amount, sometimes considerably. Additionally, you might be given the option of pulling out some of the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. With lower rates, you might also get the chance to build your home equity faster by changing to a shorter-term mortgage loan.
The Cost
All these benefits do cost something, though. You'll be charged the same kinds of fees as you did with your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might offer to pay discount points (prepaid interest) to attain a lower rate of interest. Your savings on the life of the mortgage loan could 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 any points paid can be deducted on your taxes.
Another thing about taxes is that once you lower your interest rate, naturally you will also be lowering the interest amount that you'll be able to deduct on your taxes. This is one more cost that some borrowers take into account. Call us at (818)645-7035 to help you do the math.
In the end, for most people the total of initial costs to refinance are made up very quickly in savings each month. We will help you determine which mortgage loan program is the right fit for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing might effect your taxes. Call us at (818)645-7035 to get started.
Want to know more about refinancing? Call us at (818)645-7035.