Is Refinancing Worth the Cost?

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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your mortgage. That could have been valid years ago, but as refinancing has been costing less recently, it is a good time to explore the options of a new mortgage loan! A refinanced mortgage loan is often worth its cost several times over, because of the advantages that it brings, as well as a lower interest rate.

Benefits

You may be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with a refinanced loan. You may also have the option to "cash out" a portion of the built-up equity in your residence, that you can use to take care of higher interest debts, make home improvements, or take a vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build your equity quicker.

The Cost

All these benefits do come with some expense, though. When you refinance, you're paying for basically the same things you paid for during your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You could offer to pay points (prepaid interest) to attain a better rate of interest. Your savings over the life of the loan could be significant if you've paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on advice that any points paid can be deducted on your federal income taxes.

Another cost that a borrower might take into account is that a lower interest rate will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at (214) 448-4641.

Most people find that the savings per month outweigh the up-front expenses of refinancing. We can help you figure out your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your cash on hand. Call us at (214) 448-4641 to get started.

Want to know more about refinancing? Call us at (214) 448-4641.

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