Is Refinancing Worth the Cost?

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Ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least two points below your current rate? Perhaps that was sound advice several years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing your loan has a variety of advantages that often make it worth the up-front expenditure several times over.


When you refinance, you might be able to lower the interest rate and mortgage payment amount, perhaps significantly. You also may have the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage program, giving you the ability to build up your equity quicker.

Expenses and Fees

All these advantages do cost something, though. You'll have the same types of 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 might consider paying points to be given a better interest rate. If you pay (on average) three percent of the loan amount at the start, the savings for the term of the new mortgage can be substantial. You might hear that points may be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to speak with your tax professional before making decisions based on this.

Another thing about taxes is that if you bring down your interest rate, of course you'll also be reducing the interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers take into consideration. We can help you do the math! Call us at 469-640-0400.

Ultimately, for most the amount of initial costs to refinance are made up soon in monthly savings. We'll work with you to determine which mortgage program is right for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and what effect refinancing could have on your taxes. Call us at 469-640-0400 to get you started.

Want to know more about refinancing your home? Call us: 469-640-0400.

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