Weighing the Options of Refinancing

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Ever hear the old rule of thumb that says you should only refinance if your new interest rate will be at least two points below your current one? That might have been valid a while back, but since refinancing has been costing less recently, it is never the wrong time to explore the options of a new loan! A refinance is often worth its cost many times over, considering the advantages that it brings, as well as a lower interest rate.

Advantages of Refinancing

You might be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced mortgage loan. Additionally, you may have the option of pulling out some of the equity in your home by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.

Expenses and Fees

As you probably know, you'll have some fees and expenses during your the refinance process. You will have the same kinds of expenses and fees as you did with your existing home loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might investigate paying points to get a reduced interest rate. The amount you will save over the life of the loan could be substantial if you have paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on rumors that any paid points may be deducted on your taxes.

One more cost that a borrower may take into account is that a lower interest rate will reduce the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 478-474-4600.

Most people find that the monthly savings balance out the up-front expenses of a refinance. We'll help you determine what mortgage program is right for you, considering your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing might have on your taxes. Call us at 478-474-4600 to get started.

Want to know more about refinancing your home? Give us a call: 478-474-4600.

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