When is Refinancing Worth it?
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Shopping for a mortgage loan? We'd be thrilled to answer your questions about our mortgage offerings! Give us a call at (713) 667-5472. Ready to begin? Apply Now.
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It has been said that only if your new interest is at least 2 points below your current rate, should you refinance your loan. Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be time to take a serious look. A refinance is often worth its cost many times over, factoring in the advantages that come, in addition to a lower interest rate.
Advantages of Refinancing
You may be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with your refinanced mortgage loan. Additionally, you might have the option of pulling out some of the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You may be able to refinance into a shorter-term mortgage loan, enabling you to add to your home equity quicker.
Expenses and Fees
Of course, you will have to pay for your the refinance process. You will have to pay the same sort of expenses and fees as you did with your existing mortgage. Included in the list might 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. Your savings on the life of the mortgage may be significant if you've paid up front about 3% of the new loan total. You might hear that the points may be deducted on your income taxes, but because tax regulations are difficult to keep up with, please consult with a tax professional before considering this in your calculations.
Another thing about taxes is that once you bring down your interest rate, of course you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers take into consideration. Call us at (713) 667-5472 to help you do the math.
Most borrowers find that the monthly savings balance out the initial expenses of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at (713) 667-5472 to get started.
Want to know more about refinancing your home? Give us a call at (713) 667-5472.