When is Refinancing Worth it?

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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate will be at least two points lower than your existing one? That might have been accurate years ago, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to consider a new mortgage loan! Refinancing your mortgage loan has some benefits that can make it worth the up-front cost several times over.

Advantages

You might be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage loan. You also may be given the option of tapping into the equity in your home by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you may also get the chance to build your home equity faster by switching to a shorter-term mortgage loan.

The Cost

All these advantages do cost something, though. With your refinance, you're paying for many of the same things you were charged for during your existing mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying discount points can result in a lower interest rate. Your savings over the life of the loan might be significant if you have paid up front about three percent of the new loan total. Please talk to a tax professional before acting on advice that these paid points may be deducted on your federal income taxes.

Speaking of taxes, once your interest rate is lowered, naturally you'll also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into consideration. We can help you do the math! Call us at (281) 778-0805.

Most people find that the savings each month balance out the initial cost of a refinance. We can help you find out what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at (281) 778-0805 to get you started.

Want to know more about refinancing your home? Give us a call: (281) 778-0805.

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