When is Refinancing Worth it?
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Are you looking for a mortgage? We can assist you! Call us at (214) 545-5700. Want to get started? Apply Here.
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It has been said that only when your new interest is at least two points under your current rate, should you refinance your loan. That may have been valid years ago, but with refinancing dropping in cost over the last few years, it is never the wrong time to think about a new loan! Refinancing your mortgage loan has some benefits that can make it worth the up-front expenditure a few times over.
Advantages
When you refinance, you might have the ability to lower your interest rate and monthly payment , perhaps significantly. You also may have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage program, enabling you to build up your equity faster.
Fees and Expenses
All of these advantages do cost something, though. You will pay the same kinds of fees as with your current mortgage. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can get you a lower interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the new mortgage loan can be substantial. Please consult a tax professional before acting on hear-say that these paid points can be deducted on your federal income taxes.
Another thing about taxes is that when your interest rate is lowered, naturally you'll also be reducing the paid interest amount that you will be able to deduct from your taxes. This is another cost that borrowers take into consideration. Call us at (214) 545-5700 to help you do the math.
In the end, for most people the total of up-front costs to refinance are paid back very quickly in monthly savings. We can help you explore your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at (214) 545-5700 to get started.
Curious about refinancing? Give us a call at (214) 545-5700.
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