Weighing the Options of Refinancing

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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate will be at least 2 points below your current one? Perhaps several years ago that was sage advice, but since refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing your loan has a number of benefits that can make it worth the initial cost several times over.

Benefits from Refinancing

When you refinance, you may have the ability to reduce the interest rate and monthly payment , sometimes significantly. You could also have the ability to "cash out" some of your home equity, that you are able use to consolidate debt, improve your home, or take a vacation. You may be able to refinance into a shorter-term mortgage, giving you the ability to build up your home equity faster.

Fees and Expenses

All of these benefits do come with some expense, though. You'll have to pay the same sort of fees as you did with your existing mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Doing the Math

Paying points can help you attain a lower interest rate. Your savings over the life of the mortgage could be significant if you have paid up front about 3% of the new loan total. You may have heard that the points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, please consult a tax professional before considering this in your calculations.

Speaking of taxes, once you reduce your interest rate, it follows that you will also be lowering the interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers take into consideration. We can help you do the math! Call us at 405-513-7700.

Most people find that the savings per month balance out the initial expenses of refinancing. We will work with you to find out which program is the best fit for you, looking at your cash on hand, how likely you are to sell your home in the next few years, and how refinancing may effect your taxes. Call us at 405-513-7700 to get you started.

Curious about refinancing? Call us at 405-513-7700.

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