When is Refinancing Worth it?

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Ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate will be at least two points below your existing rate? Maybe that was sound advice a number of years ago, but since refinance costs have been getting lower, it may be a good time to take a serious look. A refinanced mortgage loan can be worth its cost many times over, factoring in the benefits that it brings, as well as a lower interest rate.


You could be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage loan. You could also be able to "cash out" a portion of your home equity, which you will be able use to take care of higher interest debts, improve your home, or finance a vacation. With lower interest rates, you might also be able to build your home equity more quickly by moving to a shorter-term loan.

The Cost

As you probably expect, you will have to pay for the process of refinancing. You will be charged the same kinds of fees as with your current mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might look into paying points to reduce your interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, the savings for the life of the refinanced loan can be significant. We recommend that you talk to a tax professional before acting on rumors that these paid points can be deducted on your taxes.

Another thing about taxes is that once your interest rate is lowered, naturally you will also be reducing the interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers take into consideration. We can help you do the math! Call us at 4808226290.

Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 4808226290 to get you started.

Want to know more about refinancing your home? Call us at 4808226290.

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