When is Refinancing Worth it?

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It has been said that only in the case your new interest will be at least two points under your current rate, should you refinance your loan. That might have been accurate a while back, but since refinancing has been costing less recently, it's a good time to consider a new mortgage loan! A refinanced loan is often worth its cost several times over, because of the advantages that it brings, in addition to a reduced interest rate.

Benefits from Refinancing

You could be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced mortgage. Additionally, you might be given the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build your home equity faster by changing to a shorter-term mortgage loan.

Expenses and Fees

All of these advantages do cost something, though. You'll have the same sort 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.

Doing the Math

You might need to pay discount points (prepaid interest) to gain a lower interest rate. When you pay (on average) 3% of the loan amount initially, the savings for the life of the new loan can be great. We recommend that you consult with a tax professional before acting on rumors that the paid points may be deducted on your taxes.

One more cost that a borrower may consider is that a reduced rate of interest will lower the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 866-840-8745 x2.

Most people find that the monthly savings balance out the up-front cost of refinancing. We'll work with you to figure out what mortgage program is perfect for you, considering your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing will have on your taxes. Call us at 866-840-8745 x2 to get started.

Curious about refinancing your home? Call us at 866-840-8745 x2.

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