Is Refinancing Worth the Cost?

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Some have said that only in the case your new interest will be at least two points lower, should you refinance your loan. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it may be time to take a serious look. Refinancing your loan has various benefits that often make it worth the initial expenditure many times over.

Benefits

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. Additionally, you may have the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. With reduced rates, you might also be able to build up home equity more quickly by moving to a shorter term mortgage.

The Cost

All of these benefits do come with some expense, though. When you refinance, you are paying for basically the same things you paid for during your current mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can result in a lower interest rate. The money you'll save on the life of the loan might be substantial if you have paid up front about three percent of the new loan total. You might be told that the points may be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to consult with your tax professional before making any decisions based on this.

Speaking of taxes, once your interest rate is lowered, of course you will also be lowering the interest amount that you'll be able to deduct from your taxes. This is one more cost that some borrowers consider. Call us at (800) 974-0509 to help you do the math.

All things considered, for most the total of initial costs to refinance are paid back soon in savings each month. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your money on hand. Call us at (800) 974-0509 to get started.

Curious about refinancing? Give us a call at (800) 974-0509.