Is Refinancing Worth the Cost?

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Some have said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. That might have been true years ago, but with refinancing dropping in cost recently, it's a good time to think about a new loan! A refinance can be worth its cost many times over, considering the advantages that it brings, along with a lower interest rate.

Benefits

When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment amount, perhaps by a lot. You might also have the ability to "cash out" a portion of your equity, that you are able use to take care of higher interest debt, make home improvements, or plan a vacation. With lower rates, you might also get the chance to build up home equity faster by moving to a shorter-term mortgage.

Fees and Expenses

Of course, you'll have some fees and expenses during the the refinance process. You'll have the same kinds of fees as with your current mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying points can help you attain a lower interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the life of the new mortgage loan can be substantial. You may have heard that points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, we urge you to consult with your tax professional before considering this in your calculations.

Speaking of taxes, if your interest rate is reduced, it follows that you will also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is another cost that borrowers take into account. We can help you do the math! Call us at (281) 778-0805.

Most people find that the savings per month balance out the initial expenses of a refinance. We will work with you to figure out what loan program is best for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and the effect refinancing may have on your taxes. Call us at (281) 778-0805 to get started.

Want to know more about refinancing? Call us at (281) 778-0805.

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