Is Refinancing Worth the Cost?

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Ever heard the pearl of wisdom that says you should only consider refinancing if your new interest rate is at least 2 points lower than your current rate? Maybe that was good advice several years ago, but since refinance costs have been falling recently, it may be time to look into it. Refinancing has a variety of advantages that can make it worth the initial cost a few times over.


When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment amount, sometimes considerably. Additionally, you might have the option of tapping into the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also be able to build your home equity faster by changing to a shorter-term loan.

The Cost

As you probably expect, you'll have to pay for your process of refinancing. You'll be charged the same types of fees as you did with your current home loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Doing the Math

Paying points can result in a lower interest rate. The amount you will save over the life of the loan might be substantial if you've paid up front about 3% of the new loan balance. You may be told that the points can be tax deductible, but because tax regulations can be difficult to keep up with, please speak with your tax professional before depending on this.

An additional cost that borrowers may take into account is that a lower interest rate will lower the interest amount you will be able to deduct from your taxes. Call us at 469-640-0400 to help you do the math.

Most people find that the savings each month balance out the up-front expenses of refinancing. We will help you figure out which program is ideal for you, looking at your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing will have on your taxes. Call us at 469-640-0400 to get started.

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

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