Is Refinancing Worth the Cost?

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It has been said that only when your new interest is at least two points below your current rate, should you refinance your loan. That may have been accurate a while back, but as refinancing has been costing less recently, it is a good time to explore the options of a new mortgage loan! A refinance is often worth its cost many times over, because of the benefits that can come, along with a lower interest rate.


When you refinance, you might be able to lower the interest rate and monthly payment amount, perhaps significantly. You may also be able to "cash out" some of the built-up equity in your home, that you can use to take care of higher interest debts, improve your home, or finance a vacation. You could have the option to refinance to a shorter-term mortgage, giving you the ability to build up your home equity faster.

The Cost

All of these benefits do come with some expense, though. When you refinance, you are paying for a lot of the same things you were charged for when you got your current mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying points can help you get a better interest rate. The money you will save over the life of the mortgage may be substantial if you have paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on advice that any points paid may be deducted on your taxes.

Another thing about taxes is that once you lower your interest rate, it follows that you'll also be lowering the interest amount that you'll be able to deduct on your taxes. This is another expense that borrowers consider. We can help you do the math! Call us at 2603382561.

Most people find that the savings each month quickly outweigh the initial expenses of refinancing. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 2603382561 to get started.

Want to know more about refinancing your home? Call us: 2603382561.

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