Is Refinancing Worth the Cost?

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Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least 2 points lower than your current one? That could have been accurate years ago, but with refinancing dropping in cost recently, it is a good time to explore the options of a new mortgage! A refinanced mortgage loan is often worth its cost several times over, considering the benefits that it brings, along with a lower interest rate.


You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with a refinanced loan. Additionally, you could be given the option of pulling out some of your home equity by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You could have the option to refinance to a shorter-term mortgage loan, enabling you to build your equity faster.

The Cost

As you probably know, you will have to pay for the the refinance process. You'll be charged the same kinds of fees as with your existing mortgage. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

You might investigate paying points to be given a reduced interest rate. Your savings over the life of the mortgage loan may be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult with a tax professional before acting on advice that these paid points can be deducted on your taxes.

One more cost that borrowers may consider is that a reduced rate of interest will reduce the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at (585) 282-0960.

Most people find that the monthly savings balance out the initial cost of a refinance. We'll work with you to figure out which program is the right fit for you, looking at your cash on hand, how likely you are to sell your home in the next few years, and how refinancing will effect your taxes. Call us at (585) 282-0960 to get you started.

Want to know more about refinancing your home? Call us at (585) 282-0960.