Weighing the Options of Refinancing

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Ever heard the old rule of thumb that states you should only consider refinancing if your new interest rate is at least two points below your present rate? That may have been true a while back, but with refinancing dropping in cost recently, it is a good time to think about a new loan! A refinanced mortgage loan is often worth its cost many times over, factoring in the benefits that it brings, along with a lower interest rate.


You could be able to lower your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced mortgage. You also may be given the option of tapping into the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build up home equity faster by switching to a shorter-term mortgage loan.

Expenses and Fees

All of these advantages do cost something, though. When you refinance, you're paying for a lot of the same things you were charged for during your current mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You could need to pay discount points (prepaid interest) to get a better rate of interest. The amount you will save on the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan total. You may have heard that these points may be tax deductible, but because tax regulations can be ever-changing, we urge you to speak with a tax professional before making any decisions based on this.

An additional expense that borrowers may consider is that a reduced rate of interest will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at (440) 234-9660.

All things considered, for most the amount of initial costs to refinance are paid back soon in monthly savings. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your money on hand. Call us at (440) 234-9660 to get started.

Curious about refinancing your home? Give us a call at (440) 234-9660.

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