When is Refinancing Worth it?

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Have you ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points lower than your present one? That may have been true a while back, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new mortgage loan! A refinance can be worth its cost many times over, considering the benefits that it brings, along with a lower interest rate.


When you refinance, you might be able to lower the interest rate and monthly mortgage payment amount, sometimes considerably. You might also have the ability to "cash out" a portion of the built-up equity in your residence, that you are able use to take care of higher interest debt, make home improvements, or take a vacation. You could have the option to refinance into a shorter-term mortgage loan, giving you the ability to build your home equity faster.

The Cost

As you probably expect, you'll have to pay for your the refinance process. You will pay the same sort of expenses and fees as with your current mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to be given a lower interest rate. The money you'll save on the life of the mortgage may be substantial if you've paid up front about three percent of the new loan balance. You may have heard that points may be deducted on your income taxes, but as tax regulations are ever-changing, please speak with your tax professional before considering this in your calculations.

One more cost that borrowers may take into account is that a lower rate of interest will lower the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at (305) 535-2230.

Most people find that the monthly savings balance out the initial cost of a refinance. We will work with you to find out what program is right for you, considering your cash on hand, how likely you are to sell your residence in the near future, and the effect refinancing will have on your taxes. Call us at (305) 535-2230 to get you started.

Want to know more about refinancing? Give us a call: (305) 535-2230.

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