Is Refinancing Worth it?
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Ever hear the pearl of wisdom that states you should only refinance if the new interest rate will be at least two points lower than your present rate? That may have been true years ago, but since refinancing little to no closing costs, it's never the wrong time to think about a new loan! A refinance may be worth it several times over, because of the advantages that can come, along with a reduced interest rate.
When you refinance, you could be able to lower your interest rate and mortgage payment , sometimes by a lot. You also might have the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With lower rates, you might also be able to build your home equity faster by changing to a shorter-term mortgage loan.
All these advantages do come with some expense, though. You will have to pay the same sort of expenses and fees as you did with your present mortgage. These can include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on. In most cases, all of these costs will be paid by the lender.
Doing the Math
Paying points can get you a lower interest rate, however in most cases getting a no cost mortgage may be the best way to go. We recommend that you consult a tax professional before acting on rumors that any points paid may be deducted on your taxes.
One more expense that a borrower might consider is that a reduced interest rate will lower the interest amount you will deduct from your taxes. Call us at (951)840-4188 to help you do the math.
Ultimately, for most the total of initial costs (if any) to refinance are made up soon in monthly savings. We'll help you find out which program is ideal for you, taking into account 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 (951)840-4188 to get you started.