When is Refinancing Worth it?
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Some have said that only when your new interest will be at least 2 points lower, should you refinance your loan. That could have been true a while back, but as refinancing has been costing less recently, it's never the wrong time to think about a new loan! A refinanced loan can be worth its cost many times over, because of the advantages that can come, in addition to a reduced interest rate.
When you refinance, you may be able to reduce the interest rate and monthly payment amount, perhaps by a lot. You might also have the option to "cash out" some of your home equity, that you are able use to take care of higher interest debt, make home improvements, or finance a vacation. You could have the option to refinance to a shorter-term mortgage loan, enabling you to add to your home equity quicker.
Fees and Expenses
Of course, you will have to pay for the process of refinancing. You'll have the same kinds of fees as with your existing mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can help you get a better interest rate. Your savings on the life of the mortgage loan might be significant if you have paid up front about 3% of the new loan balance. You might be told that points can be tax deductible, but since tax regulations can be ever-changing, please consult with a tax professional before considering this in your calculations.
Another cost that a borrower might take into account is that a reduced rate of interest will lower the interest amount you'll be able to deduct on your taxes. Call us at to help you do the math.
Most people find that the savings per month quickly outweigh the up-front cost of refinancing. We will help you determine what mortgage loan program is ideal for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and how refinancing might effect your taxes. Call us at to get started.
Want to know more about refinancing your home? Call us: 810-444-0024.