Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least 2 points lower than your existing rate? That might have been sound advice years ago, but with refinancing dropping in cost recently, it is never the wrong time to consider a new loan! A refinanced mortgage loan may be worth its cost many times over, factoring in the benefits that it brings, in addition to a reduced interest rate.


You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. You also might be given the option of tapping into the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With reduced interest rates, you may also be able to build up home equity faster by moving to a shorter-term loan.

Fees and Expenses

All these advantages do cost something, though. You will have to pay the same sort of expenses and fees as you did with your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might consider paying points to reduce your interest rate. Your savings over the life of the mortgage may be significant if you have paid up front about three percent of the new loan total. You may hear that points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please consult your tax professional before making any decisions based on this.

One more cost that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you will deduct on your taxes. Call us at 540-433-6611 to help you do the math.

Most borrowers find that the savings each month quickly outweigh the initial cost of a refinance. We'll help you determine what mortgage program is the best fit for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing could effect your taxes. Call us at 540-433-6611 to get started.

Want to know more about refinancing? Call us at 540-433-6611.

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