When is Refinancing Worth it?

Want to know more about refinancing your home? Call us at 781-245-4924.

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Some have said that only in the case your new interest is at least 2 points below your current rate, should you refinance your loan. That may have been accurate years ago, but with refinancing dropping in cost recently, it is never the wrong time to think about a new mortgage! A refinanced loan may be worth its cost several times over, considering the advantages that it brings, along with a lower interest rate.

Advantages

You might be able to lower your interest rate (sometimes significantly) and have smaller monthly payments with your refinanced loan. You also might have the option of pulling out some of the equity in your house by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage program, enabling you to build your home equity quicker.

Fees and Expenses

As you probably expect, you will have some fees and expenses during your process of refinancing. You'll have the same sort of fees as you did with your current home loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

If you refinance your existing mortgage loan too soon, you might have a penalty . It all depends on your present mortgage contract. There are penalties that just apply to the first year or two. We will help you figure it out: contact us at 781-245-4924.

Doing the Math

You might consider paying points to reduce your interest rate. When you pay (on average) three percent of the loan amount initially, your savings for the term of the refinanced mortgage loan can be great. You may have heard that the points can be tax deductible, but because tax regulations are ever-changing, we urge you to consult with a tax professional before considering this in your calculations.

Speaking of taxes, when your interest rate is lowered, it follows that you'll also be reducing the paid interest amount that you may deduct on your federal income taxes. This is one more cost that borrowers consider. We can help you do the math! Call us at 781-245-4924.

Ultimately, for most borrowers the total of initial costs to refinance are made up very quickly in monthly savings. We can help you figure out your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at 781-245-4924 to get you started.