Weighing the Options of Refinancing

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Some have said that only if your new interest will be at least two points below your current rate, should you refinance your loan. That might have been accurate a while back, but with refinancing dropping in cost in recent years, it's a good time to consider a new mortgage! Refinancing your mortgage loan has a variety of advantages that often make it worth the initial expenditure a few times over.

Benefits from Refinancing

You might be able to lower your interest rate (sometimes substantially) and make smaller mortgage payments with a refinanced mortgage. You also may be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may have the option to refinance into a shorter-term mortgage program, enabling you to add to your equity quicker.

Expenses and Fees

As you probably expect, you'll have to pay for your the refinance process. You will have the same kinds of fees as you did with your existing mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying discount points can help you get a lower interest rate. The amount you'll save on the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan balance. You might hear that these points may be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to speak with a tax professional before making decisions based on this.

One more cost that a borrower might take into account is that a lower rate of interest will lower the interest amount you will deduct from your taxes. We can help you do the math! Call us at (973) 601-2122.

Most people find that the savings each month outweigh the initial expenses of refinancing. We'll work with you to determine which mortgage loan program is the ideal fit for you, considering your cash on hand, how likely you are to sell your residence in the near future, and how refinancing may effect your taxes. Call us at (973) 601-2122 to get you started.

Want to know more about refinancing? Call us: (973) 601-2122.

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