Is Refinancing Worth the Cost?

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Ever hear the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least 2 points below your current one? That might 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! A refinance is often worth its cost several times over, considering the benefits that can come, along with a lower interest rate.


When you refinance, you could have the ability to reduce your interest rate and monthly mortgage payment amount, sometimes considerably. You also could be given the option of pulling out some of the equity in your property by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build your home equity faster by switching to a shorter term mortgage loan.

The Cost

All of these advantages do come with some expense, though. With your refinance, you are paying for many of the same things you were charged for when you obtained your existing mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Doing the Math

You could need to pay discount points (prepaid interest) to attain a more favorable rate of interest. When you pay (on average) 3% of the loan amount at the start, the savings for the term of the refinanced loan can be great. Please talk to a tax professional before acting on advice that any paid points may be deducted on your taxes.

One more cost that borrowers may take into account is that a reduced interest rate will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at (727) 743-1620.

Most people find that the monthly savings quickly balance out the initial cost of refinancing. We'll help you determine which mortgage program is right for you, considering your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing will probably have on your taxes. Call us at (727) 743-1620 to get you started.

Curious about refinancing your home? Give us a call at (727) 743-1620.

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