Is Refinancing Worth the Cost?

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Some have said that only if your new interest will be at least two points below your current rate, should you refinance your mortgage. Maybe several years ago that was sage advice, but as refinance costs have been getting lower, it may be a good time to look into it. A refinanced mortgage may be worth its cost several times over, considering the benefits that it brings, in addition to a reduced interest rate.

Advantages

You could be able to lower your interest rate (sometimes substantially) and make smaller mortgage payments with your refinanced mortgage. You also could be given the option of tapping into the equity in your property by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build your home equity faster by moving to a shorter-term loan.

Fees and Expenses

All these benefits do come with some expense, though. With your refinance, you're paying for most of the same things you paid for during your current mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can get you a lower interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the new mortgage can be substantial. Please talk to a tax professional before acting on rumors that these paid points can be deducted on your taxes.

Another expense that borrowers may take into account is that a reduced interest rate will lower the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at (585) 282-0960.

In the end, for most the amount of initial costs to refinance are made up very quickly in monthly savings. 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 next couple of years, and your available cash. Call us at (585) 282-0960 to get you started.

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