Weighing the Options of Refinancing
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It has been said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your loan. That might have been true a while back, but with refinancing dropping in cost recently, it is never the wrong time to think about a new loan! A refinance may be worth its cost several times over, considering the advantages that may come, as well as a lower interest rate.
You might be able to bring down your interest rate (sometimes by a lot) and make smaller monthly payments with your refinanced loan. You may also have the option to "cash out" a portion of your home equity, that you are able use to take care of higher interest debts, improve your home, or take a vacation. With reduced rates, you might also be able to build your home equity more quickly by switching to a shorter term loan.
Expenses and Fees
As you probably know, you will have to pay for your the refinance process. You'll be charged the same sort of fees as you did with your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might need to pay points (prepaid interest) to gain a more favorable interest rate. Your savings over the life of the loan might be significant if you've paid up front about 3% of the new loan total. Please consult a tax professional before acting on rumors that the paid points may be deducted on your federal income taxes.
Speaking of taxes, if your interest rate is reduced, it follows that you will also be lowering the interest amount that you'll be able to deduct from your taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at 703-288-0777.
Most borrowers find that the savings each month balance out the initial expenses of a refinance. We will work with you to figure out what program is best for you, looking at your cash on hand, how likely you are to sell your house in the near future, and how refinancing will effect your taxes. Call us at 703-288-0777 to get started.
Curious about refinancing your home? Give us a call at 703-288-0777.
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