When is Refinancing Worth it?

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Some have said that only when your new interest is at least two points lower, should you refinance your loan. Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it could be time to look into it. A refinance is often worth its cost many times over, factoring in the advantages that come, along with a lower interest rate.


You could be able to bring down your interest rate (sometimes by a lot) and make smaller monthly payments with your refinanced mortgage loan. You may also have the option to "cash out" some of your equity, which you can use to take care of higher interest debt, make home improvements, or finance a vacation. With reduced interest rates, you may also be able to build your home equity faster by changing to a shorter-term loan.

Expenses and Fees

Of course, you'll have to pay for your process of refinancing. You will be charged the same kinds of expenses and fees as you did with your existing home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You might consider paying points to reduce your interest rate. The amount you'll save on the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan total. You might have heard that the points may be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to consult your tax professional before making any decisions based on this.

Another thing about taxes is that when you reduce your interest rate, of course you'll also be lowering the paid interest amount that you may deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at 6233400934.

Most borrowers find that the monthly savings quickly balance out the up-front cost of refinancing. We can help you figure 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 6233400934 to get you started.

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

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