Is Refinancing Worth the Cost?

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Have you ever heard the old rule of thumb that says you should only refinance if the new interest rate will be at least 2 points lower than your current rate? That might have been accurate a while back, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage! Refinancing your mortgage loan has a variety of benefits that often make it worth the up-front expenditure many times over.


When you refinance, you could have the ability to reduce your interest rate and monthly mortgage payment , perhaps by a lot. Additionally, you might be given the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. You may have the option to refinance into a shorter-term mortgage loan, giving you the ability to build up your home equity faster.

Fees and Expenses

All these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you were charged for when you obtained your current mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying discount points can result in a better interest rate. Your savings over the life of the loan might be significant if you've paid up front about 3% of the new loan total. You might hear that these points may be deducted on your income taxes, but since tax regulations are ever-changing, we urge you to consult with your tax professional before depending on this.

An additional expense that borrowers might consider is that a lower rate of interest will reduce the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at (800) 288-9693.

Most borrowers find that the monthly savings balance out the up-front cost of refinancing. We'll help you determine what loan program is ideal for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and how refinancing could effect your taxes. Call us at (800) 288-9693 to get you started.

Want to know more about refinancing? Give us a call at (800) 288-9693.

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