Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We'll be glad to talk about our mortgage offerings! Call us at 512-592-5462. Ready to get started? Apply Now.
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Ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate is at least 2 points below your present rate? That could have been true years ago, but with the fact that refinancing has been costing less recently, it's a good time to consider a new mortgage loan! Refinancing your mortgage has some advantages that can make it worth the up-front expenditure several times over.
Advantages of Refinancing
When you refinance, you might be able to reduce your interest rate and monthly payment , perhaps considerably. You could also be able to "cash out" some of the built-up equity in your home, which you can use to take care of higher interest debt, add on to your home, or take a vacation. With reduced rates, you might also be able to build up home equity faster by switching to a shorter term loan.
The Cost
Of course, you'll have some fees and expenses during your the refinance process. With your refinance, you're paying for most of the same things you were charged for during your current mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
You could need to pay discount points (prepaid interest) to get a lower rate of interest. If you pay (on average) 3% of the mortgage loan amount up front, your savings for the life of the refinanced loan can be great. Please consult a tax professional before acting on advice that any paid points can be deducted on your federal income taxes.
One more cost that borrowers might consider is that a lower interest rate will lower the interest amount you will be able to deduct from your federal income taxes. Call us at 512-592-5462 to help you do the math.
Most people find that the monthly savings outweigh the up-front cost of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your money on hand. Call us at 512-592-5462 to get you started.
Want to know more about refinancing? Give us a call: 512-592-5462.
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