When is Refinancing Worth it?

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It has been said that only when your new interest will be at least two points lower, should you refinance your mortgage. That might have been good advice years ago, but with the fact that refinancing has been costing less recently, it is a good time to consider a new mortgage loan! Refinancing has various benefits that often make it worth the up-front cost several times over.


You might be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced mortgage loan. You also might have the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also get the chance to build your home equity more quickly by moving to a shorter term loan.

Fees and Expenses

All of these benefits do come with some expense, though. You'll have the same types of fees as you did with your current home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can get you a lower interest rate. Your savings over the life of the mortgage loan may be substantial if you've paid up front about 3% of the new loan balance. Please consult with a tax professional before acting on hear-say that these points paid can be deducted on your taxes.

Another thing about taxes is that once your interest rate is lowered, naturally you will also be reducing the paid interest amount that you will be able to deduct on your federal income taxes. This is one more cost that some borrowers take into account. Call us at 6233400934 to help you do the math.

Most borrowers find that the savings each month quickly outweigh the up-front expenses of a refinance. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your cash on hand. Call us at 6233400934 to get started.

Want to know more about refinancing? Give us a call at 6233400934.

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