Is Refinancing Worth the Cost?

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Ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least 2 points below your present rate? Maybe that was good advice a number of years ago, but as refinance costs have been getting lower, it could be a good time to look into it. Refinancing your mortgage loan has various advantages that can make it worth the up-front expenditure a few times over.


When you refinance, you may have the ability to reduce your interest rate and mortgage payment , perhaps by a lot. You also could be given the option of tapping into the equity in your home by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage loan, giving you the ability to add to your home equity faster.

Expenses and Fees

Of course, you'll have some fees and expenses during the process of refinancing. You will pay the same types of expenses and fees as with your existing home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can help you get a lower interest rate. The money you will save over the life of the loan may be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on rumors that any paid points may be deducted on your federal income taxes.

Speaking of taxes, when your interest rate is reduced, it follows that you will also be lowering the paid interest amount that you may deduct on your taxes. This is one more expense that some borrowers take into consideration. We can help you do the math! Call us at 469-640-0400.

In the end, for most the amount of initial costs to refinance are made up very quickly in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at 469-640-0400 to get started.

Curious about refinancing your home? Call us at 469-640-0400.

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