Is Refinancing Worth the Cost?

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Have you ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate is at least two points below your present rate? That might have been valid years ago, but since refinancing has been costing less recently, it's a good time to consider a new mortgage! A refinance is often worth its cost several times over, factoring in the advantages that it brings, along with a reduced interest rate.

Benefits from Refinancing

When you refinance, you could have the ability to reduce your interest rate and monthly mortgage payment , sometimes considerably. You could also be able to "cash out" a portion of the built-up equity in your residence, that you will be able use to consolidate debt, make home improvements, or finance a vacation. You may have the option to refinance into a shorter-term mortgage, enabling you to add to your equity faster.

Expenses and Fees

Of course, you will have some fees and expenses during your process of refinancing. With your refinance, you're paying for most of the same things you were charged for at the time you got your original mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.