Is Refinancing Worth the Cost?

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Ever hear the old rule of thumb that states you should only refinance if your new interest rate is at least 2 points under your present one? Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it could be time to look into it. A refinanced mortgage may be worth its cost many times over, because of the benefits that may come, as well as a lower interest rate.


You may be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced mortgage loan. You could also have the option to "cash out" some of your home equity, which you can use to consolidate debt, improve your home, or finance a vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to build your home equity faster.

Expenses and Fees

All these advantages do come with some expense, though. You will have the same types of fees as you did with your current mortgage loan. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can help you attain a lower interest rate. The money you will save on the life of the loan could be significant if you have paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on rumors that these paid points can be deducted on your federal income taxes.

Speaking of taxes, if you bring down your interest rate, naturally you'll also be lowering the interest amount that you'll be able to deduct from your taxes. This is another cost that borrowers take into consideration. We can help you do the math! Call us at 719-425-2226.

In the end, for most people the total of initial costs to refinance are made up soon in monthly savings. We can help you find out your options, 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 money on hand. Call us at 719-425-2226 to get started.

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

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