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Is Refinancing Worth the Cost?

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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate is at least two points under your current rate? Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it may be time to take a serious look. Refinancing your loan has some advantages that often make it worth the initial cost a few times over.

Advantages

You might be able to lower your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with a refinanced mortgage. Additionally, you may be given the option of tapping into the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build your home equity faster.

Expenses and Fees

All of these advantages do come with some expense, though. You will have to pay the same types of fees as with your existing home loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

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

One more expense that a borrower may take into account is that a lower interest rate will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at 559-314-5363.

Most people find that the monthly savings quickly outweigh the initial cost of a refinance. We can help you find out what your options are, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 559-314-5363 to get started.

Want to know more about refinancing your home? Call us: 559-314-5363.