Is Refinancing Worth the Cost?

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it could be time to take a serious look. Refinancing your mortgage loan has various advantages that can make it worth the initial expenditure many times over.

Advantages of Refinancing

When you refinance, you could have the ability to lower the interest rate and mortgage payment amount, perhaps considerably. You might also have the ability to "cash out" some of the built-up equity in your home, that you will be able use to take care of higher interest debts, add on to your home, or take a vacation. You could have the option to refinance into a shorter-term mortgage, enabling you to build your home equity faster.

The Cost

All of these benefits do cost something, though. You will pay the same sort of fees as with your present mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might offer to pay points (prepaid interest) to attain a lower interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the refinanced mortgage can be substantial. You might have heard that these points may be deducted on your income taxes, but because tax regulations are ever-changing, please consult your tax professional before depending on this.

One more expense that borrowers may consider is that a lower interest rate will lower the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at 719-331-6278.

Most borrowers find that the savings per month outweigh the up-front cost of refinancing. We will work with you to determine which mortgage 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 what effect refinancing might have on your taxes. Call us at 719-331-6278 to get started.

Curious about refinancing your home? Give us a call at 719-331-6278.

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