When is Refinancing Worth it?

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Have you ever heard the pearl of wisdom that states you should only refinance if your new interest rate will be at least 2 points under your present rate? That may have been good advice years ago, but with the fact that refinancing has been costing less recently, it's never the wrong time to think about a new mortgage! Refinancing your mortgage has various benefits that often make it worth the up-front expenditure many times over.


When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment amount, perhaps considerably. You may also be able to "cash out" a portion of your home equity, which you will be able use to consolidate debt, add on to your home, or finance a vacation. With lower rates, you may also get the chance to build up home equity faster by switching to a shorter term mortgage loan.

The Cost

All of these advantages do come with some expense, though. When you refinance, you are paying for basically the same things you paid for during your original mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

You might consider paying points to get a lower interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the new mortgage loan can be significant. We recommend that you talk to a tax professional before acting on advice that the points paid can be deducted on your taxes.

Another thing about taxes is that once you reduce your interest rate, of course you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that borrowers consider. Call us at 9183711065 to help you do the math.

All things considered, for most the total of initial costs to refinance are made up very quickly in monthly savings. We'll help you determine which program is ideal for you, looking at your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing could have on your taxes. Call us at 9183711065 to get you started.

Want to know more about refinancing your home? Give us a call at 9183711065.