Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points below your current rate, should you refinance your loan. That could have been accurate years ago, but with refinancing dropping in cost over the last few years, it's never the wrong time to explore the options of a new loan! Refinancing your mortgage loan has a number of benefits that often make it worth the initial expenditure a few times over.


You may be able to bring down your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced loan. Additionally, you may have the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You may have the option to refinance into a shorter-term mortgage loan, enabling you to build up your home equity faster.

Fees and Expenses

As you probably know, you'll have some fees and expenses during your the refinance process. With your refinance, you're paying for most of the same things you were charged for during your current mortgage. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Do the Math

Paying points can help you get a better interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, the savings for the life of the refinanced loan can be great. You might be told that these points may be tax deductible, but as tax regulations are ever-changing, please consult your tax professional before considering this in your calculations.

One more cost that borrowers might consider is that a reduced rate of interest will lower the interest amount you'll be able to deduct from your federal income taxes. Call us at 305-967-7200 to help you do the math.

In the end, for most the total of initial costs to refinance will be made up soon in savings each month. We'll work with you to figure out which mortgage program is right for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at 305-967-7200 to get started.

Want to know more about refinancing? Give us a call: 305-967-7200.

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