Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points under your current rate, should you refinance your mortgage. Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it may be time to take a serious look. A refinance may be worth its cost many times over, factoring in the advantages that it brings, as well as a lower interest rate.

Advantages of Refinancing

When you refinance, you might have the ability to lower the interest rate and mortgage payment , perhaps considerably. You also might have the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also get the chance to build your home equity faster by changing to a shorter term loan.

The Cost

Of course, you'll have some fees and expenses during the the refinance process. With your refinance, you're paying for basically the same things you were charged for when you obtained your existing mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to reduce your interest rate. If you pay (on average) three percent of the loan amount initially, your savings for the term of the new mortgage can be substantial. You may be told that points can be tax deductible, but as tax regulations can be difficult to keep up with, please consult your tax professional before making any decisions based on this.

Another expense that borrowers might consider is that a reduced rate of interest will lower the interest amount you'll be able to deduct from your taxes. Call us at 706-860-5514 to help you do the math.

Most people find that the monthly savings outweigh the up-front expenses of a refinance. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at 706-860-5514 to get started.

Want to know more about refinancing? Give us a call at 706-860-5514.

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