When is Refinancing Worth it?

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It has been said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. That may have been valid a while back, but with refinancing dropping in cost recently, it's never the wrong time to consider a new loan! A refinanced mortgage may be worth its cost several times over, considering the advantages that it brings, along with a lower interest rate.


When you refinance, you could be able to reduce your interest rate and monthly payment amount, perhaps significantly. You could also be able to "cash out" some of your equity, which you will be able use to consolidate debts, add on to your home, or plan a vacation. You could be able to refinance to a shorter-term mortgage, giving you the ability to build up your home equity quicker.

The Cost

As you probably expect, you'll have to pay for the the refinance process. You'll pay the same types of fees as with your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might need to pay points (prepaid interest) to gain a lower rate of interest. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the refinanced loan can be great. You might hear that the points can be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to consult a tax professional before depending on this.

Speaking of taxes, when you lower your interest rate, naturally you'll also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is another expense that borrowers take into consideration. We can help you do the math! Call us at 754-202-4376.

All things considered, for most people the total of up-front costs to refinance will be paid back very quickly in savings each month. We can help you find out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at 754-202-4376 to get started.

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

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