Is Refinancing Worth the Cost?

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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. That might have been good advice a while back, but with refinancing dropping in cost in recent years, it is a good time to explore the options of a new mortgage loan! Refinancing your mortgage loan has a variety of benefits that will often make it worth the initial cost several times over.

Advantages

You could be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. Additionally, you might have the option of tapping into the equity in your home by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage program, giving you the ability to build your equity faster.

The Cost

All these advantages do come with some expense, though. You'll have to pay the same kinds of expenses and fees as with your present home loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to reduce your 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 loan can be significant. We recommend that you talk to a tax professional before acting on rumors that the paid points can be deducted on your taxes.

Speaking of taxes, if you reduce your interest rate, naturally you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers consider. Call us at (585) 282-0960 to help you do the math.

Most people find that the savings each month quickly outweigh the up-front expenses of a refinance. We will work with you to find out what mortgage loan program is best for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing may have on 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.