Is Refinancing Worth the Cost?

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It has been said that only when your new interest is at least two points lower, should you refinance your mortgage. That may have been true years ago, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage loan! A refinance is often worth its cost several times over, factoring in the advantages that can come, in addition to a reduced interest rate.

Benefits from Refinancing

You may be able to bring down your interest rate (sometimes significantly) and have smaller monthly payments with a refinanced loan. You also might be given the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage, enabling you to build your home equity faster.

Fees and Expenses

All of these benefits do cost something, though. You'll be charged the same kinds of fees as with your present mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying discount points can get you a lower interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the new mortgage loan can be great. Please talk to a tax professional before acting on hear-say that any points paid may be deducted on your taxes.

Another thing about taxes is that when your interest rate is reduced, it follows that you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is one more cost that borrowers take into consideration. Call us at 7028359202 to help you do the math.

All things considered, for most people the amount of up-front costs to refinance will be paid back very quickly in savings each month. We will work with you to determine which program is perfect for you, looking at your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing could have on your taxes. Call us at 7028359202 to get started.

Curious about refinancing? Call us at 7028359202.

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