When is Refinancing Worth it?

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Some have said that only in the case your new interest will be at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it may be time to look into it. A refinance may be worth its cost several times over, factoring in the benefits that can come, along with a reduced interest rate.

Benefits

You might be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced mortgage loan. You also may have the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage loan, enabling you to build up your equity faster.

Fees and Expenses

Of course, you will have some fees and expenses during the the refinance process. With your refinance, you are paying for many of the same things you paid for at the time you obtained your existing mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying discount points can help you attain a better interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the refinanced mortgage can be great. Please consult a tax professional before acting on hear-say that these paid points can be deducted on your taxes.

Speaking of taxes, if your interest rate is reduced, naturally you'll also be reducing the paid interest amount that you may deduct on your federal income taxes. This is another expense that borrowers consider. We can help you do the math! Call us at (972) 292-0448.

Most borrowers find that the savings each month quickly balance out the up-front cost of a refinance. We will work with you to determine which mortgage loan program is best for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and how refinancing can effect your taxes. Call us at (972) 292-0448 to get you started.

Curious about refinancing? Give us a call: (972) 292-0448.

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