Is Refinancing Worth the Cost?
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Some have said that only in the case your new interest is at least two points below your current rate, should you refinance your loan. Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it may be a good time to look into it. A refinance is often worth its cost several times over, factoring in the benefits that may come, as well as a lower interest rate.
Benefits from Refinancing
When you refinance, you might be able to lower your interest rate and monthly payment , perhaps significantly. You may also be able to "cash out" a portion of your home equity, which you are able use to take care of higher interest debt, make home improvements, or finance a vacation. With reduced interest rates, you may also get the chance to build your home equity faster by switching to a shorter term mortgage.
Of course, you'll have some fees and expenses during your the refinance process. With your refinance, you are paying for most of the same things you paid for when you obtained your current mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might think about paying points to reduce your interest rate. The amount you will save on the life of the loan may be significant if you have paid up front about 3% of the new loan balance. You might have heard that these points may be tax deductible, but because tax regulations can be ever-changing, we urge you to consult with your tax professional before making decisions based on this.
Another expense that borrowers might take into account is that a reduced interest rate will lower the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at (337) 264-9990.
In the end, for most people the amount of initial costs to refinance are made up soon in monthly savings. We will help you determine which mortgage program is perfect for you, taking into account your cash on hand, the likelihood of selling your home in the near future, and how refinancing can effect your taxes. Call us at (337) 264-9990 to get you started.
Curious about refinancing? Give us a call: (337) 264-9990.