Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least two points under your current rate? That may have been accurate a while back, but as refinancing has been costing less in recent years, it's never the wrong time to consider a new loan! A refinance can be worth its cost many times over, considering the advantages that it brings, along with a lower interest rate.


When you refinance, you might be able to reduce your interest rate and monthly payment , perhaps significantly. Additionally, you could have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build up home equity faster by changing to a shorter term mortgage.

Fees and Expenses

All of these benefits do cost something, though. You'll have the same kinds of fees as with your present home loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might think about paying points to reduce your interest rate. The money you will save on the life of the loan may be substantial if you have paid up front about 3% of the new loan balance. We recommend that you consult with a tax professional before acting on advice that any points paid may be deducted on your taxes.

Another thing about taxes is that when you bring down your interest rate, it follows that you'll also be lowering the paid interest amount that you will be able to deduct from your federal income taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at (440) 234-9660.

Most people find that the monthly savings outweigh the initial cost of refinancing. We'll help you find out which loan program is perfect for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing will probably have on your taxes. Call us at (440) 234-9660 to get started.

Want to know more about refinancing your home? Call us: (440) 234-9660.

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