Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points under your current rate, should you refinance your loan. That might have been true a while back, but with the fact that refinancing has been costing less over the last few years, it is never the wrong time to think about a new loan! Refinancing your mortgage loan has a variety of benefits that will often make it worth the up-front cost many times over.

Advantages

You may be able to bring down your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced mortgage. You also could be given the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage loan, enabling you to add to your home equity quicker.

Fees and Expenses

All of these benefits do come with some expense, though. You will have to pay the same kinds of fees as you did with your current home 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 offer to pay points (prepaid interest) to attain a lower rate of interest. If you pay (on average) 3% of the loan amount initially, your savings for the life of the new loan can be substantial. Please consult a tax professional before acting on advice that these paid points can be deducted on your taxes.

One more cost that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at 562 320-0510.

All things considered, for most borrowers the total of initial costs to refinance are paid back very quickly in monthly savings. We can help you explore what your options are, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 562 320-0510 to get you started.

Want to know more about refinancing your home? Give us a call: 562 320-0510.

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