Is Refinancing Worth the Cost?

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It has been said that only in the case your new interest is at least two points lower, should you refinance your mortgage. That could have been sound advice years ago, but with the fact that refinancing has been costing less in recent years, it is a good time to explore the options of a new loan! A refinanced mortgage loan may be worth its cost many times over, factoring in the advantages that it brings, in addition to a lower interest rate.

Advantages

You could be able to bring down your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced mortgage. You could also have the option to "cash out" a portion of the built-up equity in your home, that you can use to consolidate debt, improve your home, or take a vacation. With lower rates, you might also get the chance to build up home equity faster by switching to a shorter-term mortgage loan.

Expenses and Fees

As you probably expect, you will have some fees and expenses during your the refinance process. You will pay the same sort of fees as with your present mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying discount points can get you a lower interest rate. If you pay (on average) 3% of the loan amount at the start, the savings for the term of the new loan can be great. We recommend that you consult a tax professional before acting on advice that the points paid can be deducted on your taxes.

An additional expense that borrowers may consider is that a lower rate of interest will lower the interest amount you'll be able to deduct on your taxes. Call us at (941) 366-5800 to help you do the math.

Most borrowers find that the monthly savings balance out the initial expenses of a refinance. We can help you find out what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (941) 366-5800 to get started.

Want to know more about refinancing your home? Give us a call at (941) 366-5800.

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