Is Refinancing Worth the Cost?

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Some have said that only when your new interest is at least two points lower, should you refinance your mortgage. Perhaps several years ago that was sage advice, but since refinance costs have been falling recently, it may be time to look into it. Refinancing your mortgage loan has various advantages that often make it worth the up-front cost a few times over.

Benefits from Refinancing

When you refinance, you may have the ability to lower your interest rate and monthly mortgage payment amount, sometimes by a lot. You could also be able to "cash out" some of your home equity, which you may use to consolidate debt, add on to your home, or plan a vacation. With reduced rates, you may also be able to build up home equity more quickly by switching to a shorter term loan.

The Cost

As you probably know, you'll have some fees and expenses during your the refinance process. When you refinance, you are paying for basically the same things you were charged for during your existing mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can help you attain a lower interest rate. Your savings over the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan total. We recommend that you talk to a tax professional before acting on advice that any points paid can be deducted on your taxes.

Another thing about taxes is that if you bring down your interest rate, it follows that you will also be reducing the paid interest amount that you can deduct on your federal income taxes. This is one more cost that borrowers take into account. We can help you do the math! Call us at (800) 974-0509.

Most borrowers find that the monthly savings quickly outweigh the initial cost of a refinance. We can help you figure out your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at (800) 974-0509 to get started.

Want to know more about refinancing? Give us a call: (800) 974-0509.