Weighing the Options of Refinancing
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Have you ever heard the old rule of thumb that says you should only refinance if the new interest rate will be at least two points below your existing rate? That could have been accurate a while back, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage! A refinanced mortgage loan is often worth its cost several times over, considering the benefits that it brings, in addition to a reduced interest rate.
You might be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with a refinanced mortgage. You may also have the ability to "cash out" some of your home equity, which you are able use to take care of higher interest debt, make home improvements, or finance a vacation. You may be able to refinance into a shorter-term mortgage loan, enabling you to add to your equity faster.
Of course, you'll have some fees and expenses during your the refinance process. You will pay the same types of expenses and fees as with your present mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can get you a lower interest rate. If you pay (on average) 3% of the mortgage loan amount up front, your savings for the term of the new mortgage can be significant. You may be told that these points can be deducted on your income taxes, but as tax regulations can be difficult to keep up with, please speak with your tax professional before depending on this.
Another expense that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at (732) 969-9300.
In the end, for most people the amount of initial costs to refinance are made up very quickly in savings each month. We will work with you to determine which loan program is perfect for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and how refinancing might effect your taxes. Call us at (732) 969-9300 to get started.
Curious about refinancing? Give us a call at (732) 969-9300.