Is Refinancing Worth the Cost?

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Some have said that only when your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it may be time to look into it. Refinancing has various advantages that will often make it worth the initial cost a few times over.

Benefits from Refinancing

When you refinance, you might have the ability to reduce your interest rate and monthly payment amount, perhaps significantly. You also might be given the option of tapping into the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also get the chance to build up home equity more quickly by switching to a shorter-term loan.

Fees and Expenses

As you probably know, you will have to pay for your the refinance process. With your refinance, you are paying for basically the same things you were charged for during your original mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might think about paying points to receive a lower interest rate. When you pay (on average) 3% of the mortgage loan amount up front, the savings for the term of the refinanced loan can be significant. You might be told that the points may be tax deductible, but because tax regulations are ever-changing, please consult with your tax professional before considering this in your calculations.

Another cost that a borrower may consider is that a reduced rate of interest will lower the interest amount you will deduct from your taxes. We can help you do the math! Call us at 3038627760.

In the end, for most the total of initial costs to refinance are made up soon in monthly savings. We'll work with you to figure out which mortgage loan program is the best fit for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and how refinancing will effect your taxes. Call us at 3038627760 to get you started.

Curious about refinancing? Give us a call at 3038627760.