Is Refinancing Worth the Cost?

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It has been said that only if your new interest is at least 2 points under your current rate, should you refinance your loan. That might have been valid years ago, but with refinancing dropping in cost in recent years, it is never the wrong time to explore the options of a new mortgage loan! A refinance can be worth its cost many times over, considering the advantages that it brings, in addition to a reduced interest rate.

Advantages

You could be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced mortgage. You might also have the option to "cash out" a portion of your equity, that you will be able use to take care of higher interest debt, improve your home, or take a vacation. You may have the option to refinance to a shorter-term mortgage program, giving you the ability to add to your home equity quicker.

The Cost

As you probably know, you will have some fees and expenses during the process of refinancing. When you refinance, you're paying for basically the same things you were charged for during your existing mortgage loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying points can help you get a lower interest rate. Your savings over the life of the loan could be substantial if you have paid up front about three percent of the new loan balance. You might have heard that these points may be deducted on your income taxes, but as tax regulations can be ever-changing, we urge you to speak with your tax professional before making any decisions based on this.

An additional expense that a borrower might consider is that a reduced interest rate will reduce the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 9736012122.

All things considered, for most borrowers the total of initial costs to refinance will be paid back very quickly in monthly savings. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 9736012122 to get you started.

Curious about refinancing? Call us at 9736012122.

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