When is Refinancing Worth it?

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Ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points under your present one? That could have been good advice years ago, but with refinancing dropping in cost recently, it is a good time to explore the options of a new mortgage! A refinanced mortgage loan can be worth its cost several times over, factoring in the advantages that it brings, as well as a reduced interest rate.


When you refinance, you might have the ability to lower the interest rate and monthly payment amount, perhaps by a lot. You could also have the option to "cash out" a portion of the built-up equity in your home, that you can use to consolidate debts, make home improvements, 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 faster.

The Cost

Of course, you'll have some fees and expenses during your the refinance process. You'll pay the same sort of fees as with your present mortgage loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

You might look into paying points to be given a lower interest rate. The money you will save on the life of the mortgage loan might be significant if you've paid up front about 3% of the new loan total. You may be told that the points may be tax deductible, but because tax regulations are ever-changing, we urge you to consult a tax professional before considering this in your calculations.

One more cost that a borrower might take into account is that a lower rate of interest will lower the interest amount you will deduct on your taxes. We can help you do the math! Call us at 6233400934.

Most people find that the monthly savings outweigh the up-front expenses of refinancing. We can help you explore your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at 6233400934 to get started.

Want to know more about refinancing? Call us at 6233400934.

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