Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate is at least 2 points lower than your present one? Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing your loan has a number of benefits that can make it worth the up-front cost several times over.

Benefits from Refinancing

When you refinance, you may be able to lower your interest rate and mortgage payment , sometimes considerably. Additionally, you may be given the option of pulling out some of the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to add to your home equity quicker.

Fees and Expenses

All these advantages do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for at the time you obtained your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can get you a better interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the life of the refinanced loan can be great. We recommend that you consult a tax professional before acting on hear-say that these points paid may be deducted on your taxes.

Speaking of taxes, once you reduce your interest rate, it follows that you'll also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is another expense that borrowers consider. We can help you do the math! Call us at 5622061550.

Most borrowers find that the savings each month balance out the up-front cost of a refinance. We will work with you to figure out what loan program is right for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing might have on your taxes. Call us at 5622061550 to get started.

Want to know more about refinancing your home? Call us at 5622061550.

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5150 E Pacific Coast Highway Suite 200
Long Beach, CA 90804-3399