Is Refinancing Worth the Cost?
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In the market for a mortgage? We can assist you! Call us at 865-984-5350. Ready to begin? Apply Online Now.
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Have you ever heard the old rule of thumb that says you should only refinance if your new interest rate will be at least 2 points lower than your current rate? That might have been sound advice years ago, but with refinancing dropping in cost recently, it is a good time to think about a new mortgage! Refinancing your mortgage loan has some advantages that often make it worth the initial cost a few times over.
Benefits
You could be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with a refinanced mortgage loan. Additionally, you may have the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your equity faster.
Fees and Expenses
All of these advantages do cost something, though. You will have to pay the same sort of expenses and fees as with your current home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can get you a lower interest rate. The amount you will save on the life of the mortgage might be significant if you've paid up front about three percent of the new loan total. You might hear that these points may be tax deductible, but since tax regulations are difficult to keep up with, please consult with a tax professional before making decisions based on this.
Another thing about taxes is that when you lower your interest rate, of course you will also be lowering the interest amount that you will be able to deduct on your taxes. This is another cost that some borrowers consider. Call us at 865-984-5350 to help you do the math.
Ultimately, for most borrowers the amount of initial costs to refinance will be paid back soon in savings each month. We will work with you to find out which loan program is best for you, considering your cash on hand, how likely you are to sell your house in the near future, and how refinancing could effect your taxes. Call us at 865-984-5350 to get started.
Want to know more about refinancing your home? Give us a call: 865-984-5350.
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