Is Refinancing Worth the Cost?

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Some have said that only when your new interest will be at least 2 points under your current rate, should you refinance your loan. Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it may be a good time to take a serious look. A refinance can be worth its cost many times over, because of the advantages that come, along with a lower interest rate.

Advantages

When you refinance, you could be able to lower the interest rate and monthly mortgage payment , perhaps significantly. You also might be given the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage loan, enabling you to build your equity faster.

The Cost

All these benefits do cost something, though. You'll pay the same kinds of expenses and fees as you did with your current mortgage loan. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying points can result in a lower interest rate. The money you'll save on the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan total. You may be told that the points can be deducted on your income taxes, but since tax regulations are difficult to keep up with, we urge you to consult a tax professional before depending on this.

Another thing about taxes is that if your interest rate is reduced, of course you'll also be reducing the interest amount that you will be able to deduct on your taxes. This is another cost that some borrowers take into consideration. Call us at 407-834-3377 to help you do the math.

Most borrowers find that the monthly savings quickly balance out the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 407-834-3377 to get started.

Curious about refinancing your home? Give us a call at 407-834-3377.

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