Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least 2 points lower than your present rate? Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be time to look into it. A refinanced mortgage may be worth its cost several times over, considering the advantages that it brings, along with a lower interest rate.

Benefits

You may be able to bring down your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced mortgage loan. You may also be able to "cash out" some of the built-up equity in your home, that you may use to take care of higher interest debts, make home improvements, or plan a vacation. You may have the option to refinance into a shorter-term mortgage loan, enabling you to add to your home equity quicker.

The Cost

Of course, you will have to pay for your the refinance process. You'll be charged the same kinds of expenses and fees as with your present mortgage. These may include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Doing the Math

Paying points can get you a better interest rate. If you pay (on average) three percent of the loan amount initially, the savings for the term of the new loan can be substantial. Please consult with a tax professional before acting on advice that these points paid may be deducted on your taxes.

Another expense that a borrower might consider is that a lower interest rate will lower the interest amount you will be able to deduct from your federal income taxes. Call us at (786) 262-6486 to help you do the math.

In the end, for most people the total of initial costs to refinance will be made up very quickly in monthly savings. We can help you find out what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your cash on hand. Call us at (786) 262-6486 to get you started.

Curious about refinancing your home? Call us: (786) 262-6486.

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