Weighing the Options of Refinancing

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Some have said that only when your new interest will be at least two points below your current rate, should you refinance your loan. That might have been valid years ago, but with refinancing dropping in cost in recent years, it's a good time to explore the options of a new mortgage! A refinance may be worth its cost many times over, because of the benefits that may come, in addition to a reduced interest rate.

Benefits

When you refinance, you may be able to lower your interest rate and monthly payment amount, sometimes by a lot. You may also have the option to "cash out" a portion of the built-up equity in your residence, which you can use to consolidate debts, improve your home, or take a vacation. You may have the option to refinance to a shorter-term mortgage, enabling you to build your equity quicker.

The Cost

As you probably know, you'll have some fees and expenses during your the refinance process. You will have the same sort of fees as with your existing mortgage loan. These might include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

You might consider paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount initially, your savings for the life of the new loan can be substantial. You may have heard that these points can be deducted on your income taxes, but as tax regulations can be ever-changing, please speak with your tax professional before making any decisions based on this.

One more expense that a borrower may consider is that a lower rate of interest will reduce the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at (808) 935-0678.

Most people find that the savings each month quickly balance out the up-front cost of a refinance. We will work with you to figure out which mortgage loan program is ideal for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing will effect your taxes. Call us at (808) 935-0678 to get started.

Want to know more about refinancing your home? Call us: (808) 935-0678.

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