Weighing the Options of Refinancing

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It has been said that only when your new interest is at least 2 points under your current rate, should you refinance your mortgage. Perhaps several years ago that was sage advice, but since refinance costs have been getting lower, it may be time to look into it. Refinancing your mortgage loan has some advantages that will often make it worth the initial expenditure many times over.


When you refinance, you might have the ability to lower the interest rate and monthly mortgage payment , perhaps by a lot. Additionally, you might be given the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build up home equity faster by moving to a shorter-term loan.

The Cost

All these advantages do cost something, though. You'll be charged the same kinds of fees as with your present home loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might need to pay discount points (prepaid interest) to get a lower rate of interest. The amount you'll save on the life of the mortgage loan might be substantial if you have paid up front about three percent of the new loan total. Please consult with a tax professional before acting on hear-say that any points paid can be deducted on your federal income taxes.

Another thing about taxes is that if you reduce your interest rate, it follows that you'll also be lowering the paid interest amount that you can deduct from your federal income taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at (773) 774-9040 Ext 121.

Most people find that the savings per month quickly balance out the initial expenses of a refinance. We will work with you to determine which mortgage program is the best fit for you, looking at your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing could effect your taxes. Call us at (773) 774-9040 Ext 121 to get started.

Want to know more about refinancing your home? Give us a call at (773) 774-9040 Ext 121.

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