When is Refinancing Worth it?

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Some have said that only in the case your new interest will be at least two points lower, should you refinance your mortgage. That could have been valid a while back, but with refinancing dropping in cost in recent years, it is never the wrong time to think about a new loan! Refinancing has some advantages that often make it worth the up-front expenditure several times over.

Benefits from Refinancing

When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment , sometimes significantly. Additionally, you may have the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage loan, giving you the ability to add to your equity faster.

The Cost

Of course, you will have to pay for your the refinance process. With your refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can get you a lower interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the term of the new mortgage can be substantial. We recommend that you talk to a tax professional before acting on rumors that the paid points may be deducted on your federal income taxes.

One more cost that a borrower may consider is that a lower interest rate will lower the interest amount you'll deduct from your taxes. We can help you do the math! Call us at 562 320-0510.

Ultimately, for most the total of up-front costs to refinance will be paid back very quickly in monthly savings. 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 available cash. Call us at 562 320-0510 to get started.

Want to know more about refinancing? Call us at 562 320-0510.

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