Is Refinancing Worth the Cost?

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Ever hear the old rule of thumb that states you should only refinance if the new interest rate will be at least two points below your current rate? That may have been true years ago, but as refinancing has been costing less over the last few years, it is never the wrong time to think about a new mortgage! A refinance is often worth its cost several times over, considering the benefits that come, in addition to a reduced interest rate.

Advantages

You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced mortgage loan. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build your home equity more quickly by moving to a shorter term mortgage.

Fees and Expenses

All of these benefits do come with some expense, though. You'll be charged the same kinds of fees as with your present home loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying points can get you a lower interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, your savings for the life of the refinanced mortgage can be substantial. Please consult a tax professional before acting on rumors that these paid points may be deducted on your federal income taxes.

Another thing about taxes is that once you bring down your interest rate, naturally you will also be reducing the paid interest amount that you can deduct from your taxes. This is one more cost that borrowers consider. We can help you do the math! Call us at (585) 282-0960.

All things considered, for most people the amount of up-front costs to refinance will be paid back very quickly in monthly savings. We'll help you find out which program is perfect for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing may effect your taxes. Call us at (585) 282-0960 to get started.

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