Is Refinancing Worth the Cost?

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Ever hear the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points under your present rate? Perhaps that was good advice several years ago, but as refinance costs have been falling recently, it may be time to look into it. A refinanced mortgage can be worth its cost many times over, factoring in the benefits that come, as well as a reduced interest rate.


When you refinance, you may be able to lower your interest rate and monthly payment , perhaps significantly. You also 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 could have the option to refinance into a shorter-term mortgage, giving you the ability to add to your equity faster.

Fees and Expenses

As you probably expect, you'll have some fees and expenses during your process of refinancing. You'll be charged the same sort of fees as you did with your current home loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might investigate paying points to receive a reduced interest rate. Your savings over the life of the loan could be significant if you've paid up front about three percent of the new loan total. You might have heard that these points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, please speak with a tax professional before considering this in your calculations.

Another thing about taxes is that once you lower your interest rate, of course you'll also be lowering the paid interest amount that you can deduct from your federal income taxes. This is another cost that some borrowers take into consideration. Call us at 754-202-4376 to help you do the math.

Most borrowers find that the monthly savings balance out the initial cost of a refinance. We'll work with you to determine which program is the best fit for you, considering your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing could have on your taxes. Call us at 754-202-4376 to get you started.

Want to know more about refinancing? Give us a call at 754-202-4376.

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