Is Refinancing Worth the Cost?

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Ever hear the pearl of wisdom that says you should only refinance if your new interest rate will be at least 2 points under your existing rate? That could have been accurate a while back, but with refinancing dropping in cost in recent years, it's a good time to think about a new mortgage loan! A refinanced mortgage may be worth its cost several times over, because of the advantages that can come, in addition to a lower interest rate.

Advantages

When you refinance, you may have the ability to reduce your interest rate and mortgage payment amount, perhaps considerably. You might also have the option to "cash out" a portion of the built-up equity in your residence, which you can use to consolidate debts, make home improvements, or take a vacation. With lower rates, you may also be able to build up home equity faster by changing to a shorter-term mortgage loan.

The Cost

All these advantages do cost something, though. You will be charged the same sort of expenses and fees as with your current home loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

You might think about paying points to get a lower interest rate. Your savings over the life of the loan might be significant if you have paid up front about 3% of the new loan balance. You may hear that the points may be deducted on your income taxes, but as tax regulations are difficult to keep up with, we urge you to consult with a tax professional before considering this in your calculations.

One more expense that borrowers may take into account is that a lower rate of interest will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at 754-202-4376.

Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We will work with you to determine what program is best for you, considering your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will have on your taxes. Call us at 754-202-4376 to get you started.

Curious about refinancing your home? Call us at 754-202-4376.

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