Weighing the Options of Refinancing

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Some have said that only when your new interest is at least 2 points lower, should you refinance your loan. Perhaps that was good advice several years ago, but since refinance costs have been falling recently, it may be time to look into it. A refinanced loan can be worth its cost many times over, because of the benefits that come, in addition to a lower interest rate.


You may be able to lower your interest rate (sometimes substantially) and make smaller monthly payments with a refinanced mortgage. Additionally, you may be given the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage loan, giving you the ability to add to your equity faster.

The Cost

All these advantages do cost something, though. You will have to pay the same types of expenses and fees as you did with your current mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

Do the Math

You might think about paying points to reduce your interest rate. Your savings on the life of the mortgage might be significant if you've paid up front about three percent of the new loan total. Please consult with a tax professional before acting on hear-say that any paid points may be deducted on your taxes.

Another expense that borrowers might consider is that a reduced interest rate will lower the interest amount you'll be able to deduct from your taxes. Call us at 719-425-2226 to help you do the math.

Most people find that the savings per month quickly balance out the up-front expenses of a refinance. We can help you explore what your options are, considering the effect a refinance could 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 719-425-2226 to get you started.

Curious about refinancing your home? Call us at 719-425-2226.