Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points under your present rate? That could have been valid years ago, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage loan! Refinancing your mortgage has various benefits that often make it worth the up-front cost many times over.

Benefits

You may be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. Additionally, you may 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. You might have the option to refinance into a shorter-term mortgage, giving you the ability to build your home equity faster.

The Cost

As you probably expect, you will have some fees and expenses during your process of refinancing. You'll have to pay the same kinds of fees as you did with your current home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You could need to pay discount points (prepaid interest) to attain a better rate of interest. Your savings over the life of the mortgage may be substantial if you've paid up front about 3% of the new loan total. Please talk to a tax professional before acting on hear-say that any points paid may be deducted on your federal income taxes.

An additional expense that a borrower might take into account is that a lower rate of interest will lower the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 4357556622.

Most people find that the savings per month quickly balance out the initial expenses of refinancing. We will help you figure out what loan program is right for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing might effect your taxes. Call us at 4357556622 to get you started.

Curious about refinancing your home? Call us at 4357556622.