Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We'd be thrilled to discuss our mortgage offerings! Give us a call today at (207) 571-8034. Want to get started? Apply Online Now.
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Some have said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. That could have been valid years ago, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to consider a new mortgage! A refinance can be worth its cost several times over, because of the benefits that can come, along with a reduced interest rate.
Advantages
You might be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced mortgage loan. You could also have the option to "cash out" some of the built-up equity in your residence, that you are able use to take care of higher interest debt, improve your home, or plan a vacation. With lower interest rates, you may also get the chance to build up home equity more quickly by switching to a shorter-term loan.
Fees and Expenses
All of these advantages do cost something, though. When you refinance, you're paying for basically the same things you were charged for at the time you obtained your original mortgage. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay points (prepaid interest) to gain a better rate of interest. Your savings over the life of the mortgage loan may be substantial if you have paid up front about 3% of the new loan total. You might hear that the points can be deducted on your income taxes, but since tax regulations are ever-changing, please consult with a tax professional before making any decisions based on this.
Speaking of taxes, 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 federal income taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at (207) 571-8034.
Most people find that the monthly savings quickly outweigh the initial cost of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at (207) 571-8034 to get started.
Want to know more about refinancing your home? Call us: (207) 571-8034.