Weighing the Options of Refinancing

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Ever heard the old rule of thumb that states you should only refinance if your new interest rate is at least two points below your current rate? Maybe several years ago that was good advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan may be worth its cost many times over, considering the benefits that can come, as well as a lower interest rate.


When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment amount, perhaps significantly. You also might be given the option of pulling out some of the equity in your house by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You could have the option to refinance to a shorter-term mortgage program, giving you the ability to build your home equity quicker.

Expenses and Fees

As you probably know, you'll have to pay for your process of refinancing. With your refinance, you're paying for basically the same things you paid for during your current mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying discount points can result in a better interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, the savings for the term of the refinanced mortgage loan can be significant. You may have heard that points may be tax deductible, but since tax regulations can be ever-changing, please consult your tax professional before depending on this.

An additional expense that a borrower might consider is that a lower rate of interest will reduce the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at 623-340-0934.

All things considered, for most borrowers the amount of initial costs to refinance are made up very quickly in savings each month. We will work with you to figure out which loan program is perfect for you, looking at your cash on hand, how likely you are to sell your house in the near future, and how refinancing may effect your taxes. Call us at 623-340-0934 to get started.

Want to know more about refinancing your home? Call us: 623-340-0934.

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