When is Refinancing Worth it?

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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least 2 points lower than your existing rate? That may have been valid years ago, but with refinancing dropping in cost recently, it's a good time to consider a new loan! Refinancing has some benefits that can make it worth the up-front expenditure a few times over.


When you refinance, you could have the ability to lower your interest rate and mortgage payment , sometimes significantly. You could also have the ability to "cash out" some of your equity, which you will be able use to consolidate debts, make home improvements, or finance a vacation. With reduced rates, you may also be able to build your home equity faster by changing to a shorter-term mortgage.

The Cost

All of these advantages do cost something, though. You will pay the same types of expenses and fees as you did with your present mortgage loan. Included in the list 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 better interest rate. Your savings over the life of the loan may be substantial if you have paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on advice that the paid points may be deducted on your federal income taxes.

Another 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 623-340-0934.

All things considered, for most the amount of initial costs to refinance are paid back soon in monthly savings. We can help you find out your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 623-340-0934 to get started.

Curious about refinancing your home? Call us at 623-340-0934.

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