When is Refinancing Worth it?

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Ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least 2 points below your existing rate? That may have been accurate years ago, but as refinancing has been costing less in recent years, it is never the wrong time to explore the options of a new mortgage! A refinanced loan is often worth its cost many times over, factoring in the benefits that can come, as well as a lower interest rate.


When you refinance, you may be able to reduce the interest rate and mortgage payment amount, perhaps significantly. You also could have the option of tapping into the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build your home equity faster by moving to a shorter term loan.

Fees and Expenses

As you probably expect, you'll have some fees and expenses during your process of refinancing. You'll be charged the same kinds of fees as with your present home loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying discount points can result in a better interest rate. Your savings on the life of the loan could be significant if you have paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on hear-say that any paid points can be deducted on your taxes.

Another expense that a borrower might consider is that a lower rate of interest will reduce the interest amount you'll deduct on your taxes. Call us at 2603382561 to help you do the math.

Most people find that the monthly savings balance out the up-front expenses of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 2603382561 to get you started.

Curious about refinancing your home? Call us at 2603382561.

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