Is Refinancing Worth the Cost?

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It has been said that only in the case your new interest will be at least two points lower, should you refinance your loan. Maybe that was good advice several years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinance can be worth its cost many times over, considering the advantages that it brings, in addition to a lower interest rate.

Benefits

When you refinance, you could be able to lower your interest rate and monthly mortgage payment amount, sometimes significantly. Additionally, you might be given the option of tapping into the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build your home equity faster by switching to a shorter-term mortgage.

Expenses and Fees

All these advantages do come with some expense, though. You will be charged the same sort of fees as with your existing home loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Do the Math

You might look into paying points to reduce your interest rate. Your savings over the life of the mortgage loan might be significant if you have paid up front about 3% of the new loan total. You may hear that these points can be tax deductible, but as tax regulations can be ever-changing, we urge you to consult a tax professional before depending on this.

Another thing about taxes is that if you bring down your interest rate, of course you will also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is one more cost that borrowers consider. Call us at 754-202-4376 to help you do the math.

All things considered, for most people the amount of initial costs to refinance will be paid back soon in savings each month. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 754-202-4376 to get started.

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

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