Is Refinancing Worth the Cost?

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Ever hear the pearl of wisdom that states you should only refinance if your new interest rate is at least two points under your present one? That could have been accurate a while back, but since refinancing has been costing less in recent years, it's a good time to consider a new mortgage! A refinanced mortgage may be worth its cost several times over, considering the advantages that can come, as well as a lower interest rate.


When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment amount, perhaps by a lot. You might also have the option to "cash out" some of the built-up equity in your home, that you may use to take care of higher interest debts, improve your home, or take a vacation. You may be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your equity faster.

Expenses and Fees

As you probably expect, you will have to pay for the process of refinancing. You'll have to pay the same types of fees as with your current home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Doing the Math

Paying discount points can result in a lower interest rate. Your savings over the life of the loan could be significant if you have paid up front about three percent of the new loan balance. You might be told that the points can be deducted on your income taxes, but because tax regulations are difficult to keep up with, please speak with a tax professional before depending on this.

Another thing about taxes is that once your interest rate is reduced, naturally you'll also be lowering the paid interest amount that you'll be able to deduct from your taxes. This is one more cost that borrowers take into consideration. Call us at (941) 366-5800 to help you do the math.

Most people find that the savings each month balance out the initial expenses of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at (941) 366-5800 to get started.

Want to know more about refinancing? Call us: (941) 366-5800.

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