Is Refinancing Worth the Cost?

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Some have said that only when your new interest will be at least two points lower, should you refinance your loan. That could have been valid years ago, but with refinancing dropping in cost recently, it is never the wrong time to think about a new mortgage loan! Refinancing your mortgage loan has a number of advantages that often make it worth the up-front expenditure a few times over.

Benefits

You could be able to bring down your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced mortgage loan. You also might be given the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to build up your equity quicker.

The Cost

All of these benefits do come with some expense, though. With your refinance, you're paying for a lot of the same things you were charged for during your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might look into paying points to reduce your interest rate. The amount you will save on the life of the mortgage may be substantial if you have paid up front about 3% of the new loan total. You may hear that points can be deducted on your income taxes, but as tax regulations can be ever-changing, please speak with your tax professional before considering this in your calculations.

Another expense that a borrower may consider is that a reduced interest rate will reduce the interest amount you will be able to deduct on your taxes. Call us at 954.920.9799 to help you do the math.

All things considered, for most people the amount of up-front costs to refinance will be made up soon in monthly savings. We can help you explore your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at 954.920.9799 to get started.

Want to know more about refinancing? Give us a call: 954.920.9799.

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