Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your loan. That could have been true years ago, but with refinancing dropping in cost over the last few years, it's never the wrong time to consider a new loan! A refinanced loan is often worth its cost several times over, considering the benefits that can come, along with a reduced interest rate.
Benefits from Refinancing
You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with a refinanced mortgage. You could also have the option to "cash out" a portion of the built-up equity in your residence, which you are able use to consolidate debts, improve your home, or finance a vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to build up your equity faster.
Expenses and Fees
As you probably expect, you will have to pay for the the refinance process. You'll be charged the same types of fees as with your present mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might investigate paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount at the start, the savings for the term of the refinanced mortgage loan can be significant. Please consult with a tax professional before acting on advice that any paid points may be deducted on your federal income taxes.
An additional expense that borrowers might take into account is that a lower interest rate will reduce the interest amount you will deduct from your taxes. Call us at 405-513-7700 to help you do the math.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We will help you determine which mortgage loan program is perfect for you, considering your cash on hand, the likelihood of selling your house in the next few years, and what effect refinancing might have on your taxes. Call us at 405-513-7700 to get started.
Curious about refinancing your home? Call us at 405-513-7700.