Is Refinancing Worth the Cost?

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Some have said that only if your new interest will be at least 2 points below your current rate, should you refinance your loan. That could have been true years ago, but with the fact that refinancing has been costing less recently, it is a good time to consider a new loan! A refinance is often worth its cost several times over, factoring in the advantages that it brings, along with a lower interest rate.

Benefits

You might be able to lower your interest rate (sometimes by a lot) and make smaller monthly payments with a refinanced loan. You also might have the option of pulling out some of the equity in your house by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You might have the option to refinance to a shorter-term mortgage, enabling you to build your home equity quicker.

The Cost

All these benefits do cost something, though. You will have the same sort of expenses and fees as with your present mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You could need to pay points (prepaid interest) to attain a lower rate of interest. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the refinanced loan can be great. You may have heard that these points can be deducted on your income taxes, but as tax regulations can be ever-changing, we urge you to speak with a tax professional before considering this in your calculations.

Speaking of taxes, when your interest rate is lowered, it follows that you'll also be reducing the interest amount that you will be able to deduct on your taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at 8888107112.

Most people find that the savings each month quickly outweigh the up-front cost of a refinance. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 8888107112 to get you started.

Want to know more about refinancing your home? Give us a call at 8888107112.

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The Mortgage Partner

30100 Crown Valley Parkway, Suite 11
Laguna Niguel, CA 92677