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If you are a homeowner and interest rates drop, your financial situation changes
or you are facing higher payments because your loan has an adjustable interest rate, you may
choose to refinance. You can refinance your loan as many times as you
wish, until your mortgage is paid in full.
Refinancing may be a good idea if:
- You have good credit and can qualify for a new loan.
- Your home has increased in value since you bought it.
- You plan to remain in your home long enough to recover refinancing costs.
- You will save money on your monthly payments. Saving just $100 per month means
an additional $1,200 per year toward retirement or other investments.
Contact a financial planning professional or use a refinance calculator to determine if refinancing
is right for your situation.
The Benefits Of Refinancing
- Lowering interest payments, which can save hundreds of dollars each month, thousands each year.
- Paying your mortgage loan sooner — especially if you a 30-year mortgage
with a 15-year mortgage.
- Changing from an adjustable rate loan to secure stable principle and interest payments.
- Consolidating or better managing overall debt.
The Cost Of Refinancing
Closing costs on a refinanced mortgage are generally 2 percent to 4 percent of the loan amount,
the same as closing on a newly purchased home. Depending on your financial situation you may
include the closing costs to the total amount of your loan, however, you will be paying interest
on the closing costs. Also consider any prepayment penalties on your existing loan before refinancing.
Online calculators are available to demonstrate the potential cost savings of various refinancing options.
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