Weighing the Options of Refinancing

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Some have said that only in the case your new interest is at least two points lower, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it could be time to look into it. Refinancing your mortgage loan has various advantages that will often make it worth the initial expenditure a few times over.

Advantages of Refinancing

You might be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced loan. Additionally, you might 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 be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your home equity quicker.

The Cost

As you probably know, you will have some fees and expenses during your the refinance process. You'll have to pay the same types of fees as you did with your current mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can result in a better interest rate. The amount you will save on the life of the loan might be substantial if you've paid up front about three percent of the new loan balance. You might have heard that points can be tax deductible, but since tax regulations are difficult to keep up with, we urge you to consult with a tax professional before making any decisions based on this.

Another cost that a borrower might consider is that a lower rate of interest will reduce the interest amount you'll deduct on your taxes. Call us at 714-970-9700 to help you do the math.

Most people find that the monthly savings quickly outweigh the up-front cost of a refinance. We can help you explore what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 714-970-9700 to get you started.

Want to know more about refinancing your home? Call us: 714-970-9700.

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