When is Refinancing Worth it?

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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be a good time to look into it. Refinancing your mortgage has various benefits that will often make it worth the up-front cost a few times over.


You may be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced mortgage loan. You might also be able to "cash out" a portion of the built-up equity in your residence, which you may use to consolidate debts, add on to your home, or finance a vacation. With reduced interest rates, you might also be able to build up home equity faster by switching to a shorter-term loan.

Expenses and Fees

All these benefits do cost something, though. When you refinance, you're paying for basically the same things you were charged for during your current mortgage. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might offer to pay points (prepaid interest) to get a better interest rate. When you pay (on average) 3% of the loan amount initially, the savings for the term of the refinanced mortgage loan can be substantial. We recommend that you consult with a tax professional before acting on hear-say that the points paid can be deducted on your taxes.

Another thing about taxes is that when your interest rate is lowered, of course you will also be reducing the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that borrowers consider. We can help you do the math! Call us at (800) 288-9693.

Most people find that the savings each month quickly balance out the up-front cost of refinancing. We will work with you to determine which loan program is perfect for you, considering your cash on hand, how likely you are to sell your home in the next few years, and how refinancing may effect your taxes. Call us at (800) 288-9693 to get started.

Curious about refinancing your home? Call us: (800) 288-9693.

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