Is Refinancing Worth the Cost?

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Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least two points under your present rate? Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it may be time to look into it. A refinanced loan may be worth its cost many times over, because of the benefits that it brings, in addition to a reduced interest rate.

Benefits

When you refinance, you might have the ability to lower the interest rate and monthly mortgage payment , perhaps by a lot. Additionally, you may have the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With lower rates, you may also get the chance to build up home equity faster by moving to a shorter term loan.

Expenses and Fees

Of course, you will have to pay for the process of refinancing. With your refinance, you are paying for basically the same things you were charged for during your existing mortgage loan. Among these might 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. When you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the refinanced loan can be significant. You may hear that the points may be tax deductible, but as tax regulations can be ever-changing, we urge you to consult with a tax professional before depending on this.

An additional expense that a borrower might take into account is that a reduced rate of interest will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at (321) 777-7277.

In the end, for most the amount of up-front costs to refinance are made up soon in monthly savings. We will help you determine which loan program is perfect for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and how refinancing could effect your taxes. Call us at (321) 777-7277 to get you started.

Curious about refinancing your home? Give us a call at (321) 777-7277.

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