Weighing the Options of Refinancing

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Ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points below your existing rate? Maybe several years ago that was good advice, but since refinance costs have been getting lower, it could be time to look into it. A refinance may be worth its cost many times over, factoring in the advantages that it brings, in addition to a lower interest rate.

Advantages

You might be able to bring down your interest rate (sometimes significantly) and make smaller monthly payments with your refinanced mortgage. Additionally, you could have the option of pulling out some of the equity in your property by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With reduced rates, you might also get the chance to build your home equity more quickly by moving to a shorter-term mortgage loan.

Fees and Expenses

All these benefits do cost something, though. You'll have the same types of expenses and fees as you did with your existing mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Do the Math

Paying points can result in a better interest rate. The amount you will save on the life of the loan could be significant if you have paid up front about three percent of the new loan balance. We recommend that you talk to a tax professional before acting on hear-say that the points paid may be deducted on your federal income taxes.

Speaking of taxes, if 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 taxes. This is another expense that borrowers consider. Call us at (954) 539-2000 to help you do the math.

Most borrowers find that the monthly savings quickly balance out the up-front cost of a refinance. We'll work with you to find out what mortgage loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing might have on your taxes. Call us at (954) 539-2000 to get started.

Want to know more about refinancing? Give us a call: Broward: 954.539.2000 | Dade: 305.387.0345.

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