Is Refinancing Worth the Cost?

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Ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate is at least 2 points below your existing one? That could have been true years ago, but with the fact that refinancing has been costing less over the last few years, it is a good time to explore the options of a new mortgage loan! Refinancing has various benefits that often make it worth the initial expenditure a few times over.


You could be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced loan. Additionally, you might have the option of tapping into the equity in your home by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You could be able to refinance to a shorter-term mortgage program, enabling you to build your equity quicker.

Expenses and Fees

As you probably expect, you will have some fees and expenses during your process of refinancing. With your refinance, you are paying for many of the same things you paid for at the time you got your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

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

Another thing about taxes is that once you lower your interest rate, of course you'll also be reducing the interest amount that you can deduct on your taxes. This is another expense that borrowers take into consideration. Call us at (727) 478-2797 to help you do the math.

Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We'll help you find out what mortgage program is perfect for you, considering your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing will have on your taxes. Call us at (727) 478-2797 to get you started.

Curious about refinancing your home? Give us a call: (727) 478-2797.

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