Weighing the Options of Refinancing

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Some have said that only if your new interest will be at least 2 points lower, should you refinance your loan. Perhaps several years ago that was wise advice, but since refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing your mortgage has some advantages that will often make it worth the up-front cost a few times over.

Advantages

When you refinance, you could be able to reduce your interest rate and mortgage payment , perhaps considerably. You may also be able to "cash out" some of your home equity, that you may use to take care of higher interest debts, improve your home, or plan a vacation. You might have the option to refinance into a shorter-term mortgage program, enabling you to build your home equity quicker.

Expenses and Fees

As you probably expect, you'll have to pay for the process of refinancing. When you refinance, you're paying for basically the same things you paid for when you got your current mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Doing the Math

Paying points can result in a better interest rate. If you pay (on average) 3% of the mortgage loan amount initially, the savings for the term of the refinanced mortgage can be great. Please consult a tax professional before acting on hear-say that the paid points may be deducted on your federal income taxes.

Another cost that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you'll deduct from your federal income taxes. Call us at (718) 477-4405 to help you do the math.

Most borrowers find that the monthly savings outweigh the initial cost of a refinance. We'll work with you to determine what mortgage program is right for you, looking at your cash on hand, the likelihood of selling your home in the near future, and what effect refinancing will probably have on your taxes. Call us at (718) 477-4405 to get you started.

Want to know more about refinancing your home? Call us: (718) 477-4405.

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