Weighing the Options of Refinancing
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Some have said that only when your new interest will be at least 2 points below your current rate, should you refinance your loan. That might have been valid a while back, but as refinancing has been costing less recently, it's never the wrong time to think about a new mortgage loan! Refinancing your loan has various benefits that will often make it worth the up-front expenditure a few times over.
You may be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. Additionally, you may be given the option of pulling out some of the equity in your house by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage loan, giving you the ability to build up your home equity quicker.
Expenses and Fees
As you probably know, you will have to pay for your process of refinancing. When you refinance, you're paying for many of the same things you paid for when you obtained your current mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
You might be obligated to make a penalty payment if you refinance your current mortgage loan too quickly. That depends on the terms of your present loan. However, these penalties may apply only to the first several years of the mortgage. We will help you figure it out: contact us at 503-253-3299.
Doing the Math
You might offer to pay discount points (prepaid interest) to get a better rate of interest. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the new mortgage can be substantial. Please consult with a tax professional before acting on hear-say that the paid points may be deducted on your taxes.
One more expense that borrowers may consider is that a reduced interest rate will reduce the interest amount you will be able to deduct on your taxes. Call us at 503-253-3299 to help you do the math.
All things considered, for most borrowers the amount of up-front costs to refinance will be paid back soon in monthly savings. We'll work with you to figure out which mortgage program is perfect for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing might have on your taxes. Call us at 503-253-3299 to get you started.
Searching for mortgage advice? We can assist you! Give us a call at 503-253-3299. Ready to begin? Apply Online Now