When is Refinancing Worth it?
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Are you looking for a new mortgage? We'd be thrilled to answer your questions about our mortgage offerings! Give us a call at (773) 774-9040 Ext 121. Want to get started? Apply Online Now.
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Some have said that only if your new interest will be at least two points under your current rate, should you refinance your loan. Perhaps that was good advice a number of years ago, but since refinance costs have been getting lower, it may be time to look into it. A refinanced mortgage loan may be worth its cost many times over, because of the advantages that it brings, as well as a lower interest rate.
Benefits
You may be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced loan. You also could be given the option of pulling out some of your home equity by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. You could be able to refinance into a shorter-term mortgage program, enabling you to build up your home equity quicker.
Expenses and Fees
As you probably expect, you'll have some fees and expenses during your the refinance process. You'll be charged the same types of fees as you did with your existing home loan. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
You could offer to pay points (prepaid interest) to gain a lower interest rate. If you pay (on average) three percent of the loan amount initially, your savings for the term of the refinanced mortgage loan can be great. Please talk to a tax professional before acting on advice that these points paid may be deducted on your taxes.
Another thing about taxes is that when your interest rate is reduced, of course you will also be lowering the interest amount that you'll be able to deduct from your taxes. This is one more expense that borrowers take into account. Call us at (773) 774-9040 Ext 121 to help you do the math.
In the end, for most people the amount of initial costs to refinance will be made up very quickly in savings each month. We'll help you figure out what loan program is right for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing may have on your taxes. Call us at (773) 774-9040 Ext 121 to get started.
Curious about refinancing your home? Call us: (773) 774-9040 Ext 121.