Is Refinancing Worth the Cost?

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It has been said that only if your new interest will be at least two points below your current rate, should you refinance your mortgage. Perhaps several years ago that was sage advice, but since refinance costs have been falling recently, it may be time to look into it. Refinancing your loan has a variety of advantages that will often make it worth the initial cost a few times over.

Benefits

When you refinance, you might be able to reduce your interest rate and monthly mortgage payment , perhaps considerably. You also might be given the option of tapping into the equity in your house by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage, giving you the ability to build up your home equity faster.

Fees and Expenses

All these benefits do cost something, though. You'll have to pay the same kinds of expenses and fees as with your existing mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying points can result in a better interest rate. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the new mortgage loan can be substantial. You might have heard that points may be deducted on your income taxes, but as tax regulations can be ever-changing, we urge you to consult your tax professional before considering this in your calculations.

Another cost that borrowers might take into account is that a lower interest rate will reduce the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at (407) 898-7559.

Ultimately, for most the amount of up-front costs to refinance are made up very quickly in savings each month. We will help you determine what mortgage program is the best fit for you, considering your cash on hand, the likelihood of selling your home in the next few years, and how refinancing may effect your taxes. Call us at (407) 898-7559 to get you started.

Want to know more about refinancing? Call us at (407) 898-7559.

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