Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least two points below your existing one? That might have been valid a while back, but with the fact that refinancing has been costing less in recent years, it is a good time to think about a new loan! A refinanced mortgage may be worth its cost several times over, because of the advantages that it brings, along with a lower interest rate.

Benefits

When you refinance, you could have the ability to reduce the interest rate and monthly payment , perhaps considerably. You might also have the ability to "cash out" a portion of the built-up equity in your residence, that you may use to take care of higher interest debt, add on to your home, or plan a vacation. You may be able to refinance to a shorter-term mortgage program, enabling you to build up your home equity quicker.

Expenses and Fees

All of these benefits do come with some expense, though. When you refinance, you're paying for most of the same things you were charged for during your original mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might look into paying points to receive a better interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the new mortgage can be significant. You may hear that points may be deducted on your income taxes, but because tax regulations are ever-changing, please consult a tax professional before making any decisions based on this.

Speaking of taxes, once your interest rate is reduced, naturally you'll also be lowering the paid interest amount that you can deduct from your taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at (800) 288-9693.

Most people find that the monthly savings outweigh the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at (800) 288-9693 to get started.

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

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