Is Refinancing Worth the Cost?
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Ever hear the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points under your existing one? Maybe several years ago that was good advice, but as refinance costs have been falling recently, it may be a good time to look into it. A refinanced mortgage loan is often worth its cost many times over, considering the advantages that can come, as well as a reduced interest rate.
Benefits
When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment , perhaps by a lot. You might also have the ability to "cash out" a portion of your equity, that you can use to take care of higher interest debts, add on to your home, or plan a vacation. With reduced rates, you might also be able to build up home equity more quickly by changing to a shorter term loan.
Fees and Expenses
As you probably expect, you will have to pay for your the refinance process. You'll pay the same types of fees as you did with your existing mortgage. luded in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to reduce your interest rate. Your savings on the life of the mortgage might be significant if you've paid up front about three percent of the new loan total. Please consult with a tax professional before acting on advice that the points paid may be deducted on your taxes.
Another thing about taxes is that if your interest rate is lowered, it follows that you'll also be lowering the interest amount that you will be able to deduct on your taxes. This is one more cost that some borrowers take into consideration. Call us at (650) 631-1800 to help you do the math.
All things considered, for most borrowers the total of initial costs to refinance will be paid back soon in monthly savings. We will work with you to determine which program is best for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing may have on your taxes. Call us at (650) 631-1800 to get you started.
Want to know more about refinancing? Call us at (650) 631-1800.