Weighing the Options of Refinancing

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Ever hear the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points under your current rate? Maybe that was sound advice several years ago, but since refinance costs have been getting lower, it could be time to take a serious look. A refinance is often worth its cost many times over, considering the advantages that it brings, along with a lower interest rate.


You could be able to lower your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced mortgage. You might also have the ability to "cash out" a portion of the built-up equity in your residence, that you will be able use to take care of higher interest debt, add on to your home, or finance a vacation. With reduced rates, you may also be able to build your home equity more quickly by switching to a shorter term loan.

The Cost

Of course, you will have some fees and expenses during the process of refinancing. You will have the same types of expenses and fees as with your current mortgage loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

Paying discount points can help you attain a lower interest rate. Your savings on the life of the mortgage loan might be substantial if you have paid up front about 3% of the new loan total. Please talk to a tax professional before acting on rumors that these points paid may be deducted on your federal income taxes.

One more expense that borrowers may consider is that a lower interest rate will reduce the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at (808) 935-0678.

Most people find that the savings per month quickly outweigh the initial cost of refinancing. We will work with you to determine which mortgage loan program is ideal for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and how refinancing can effect your taxes. Call us at (808) 935-0678 to get you started.

Curious about refinancing? Call us at (808) 935-0678.

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