Is Refinancing Worth the Cost?

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Have you ever heard the old rule of thumb that says you should only refinance if your new interest rate is at least two points under your present one? That could have been true years ago, but with refinancing dropping in cost in recent years, it's a good time to consider a new mortgage! Refinancing has a variety of benefits that often make it worth the up-front expenditure many times over.

Benefits

You might be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with your refinanced mortgage. You also might be given the option of tapping into the equity in your home by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build up home equity faster by changing to a shorter term mortgage.

Expenses and Fees

Of course, you'll have some fees and expenses during the process of refinancing. With your refinance, you're paying for many of the same things you paid for at the time you obtained your existing mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might offer to pay discount points (prepaid interest) to get a better interest rate. The money you will save on the life of the mortgage loan could be significant if you've paid up front about three percent of the new loan total. Please consult with a tax professional before acting on hear-say that the paid points may be deducted on your taxes.

An additional cost that a borrower might take into account is that a lower rate of interest will lower the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at (727) 743-1620.

Most people find that the monthly savings outweigh the up-front expenses of a refinance. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at (727) 743-1620 to get you started.

Curious about refinancing your home? Call us at (727) 743-1620.

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