Weighing the Options of Refinancing

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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. That may have been valid years ago, but with refinancing dropping in cost recently, it is a good time to explore the options of a new loan! A refinanced mortgage loan may be worth its cost several times over, because of the benefits that may come, in addition to a lower interest rate.


You could be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced mortgage loan. You could also have the ability to "cash out" a portion of the built-up equity in your residence, that you will be able use to consolidate debts, make home improvements, or finance a vacation. With lower interest rates, you may also get the chance to build up home equity more quickly by changing to a shorter term mortgage.

The Cost

All of these benefits do cost something, though. You will pay the same types of fees as with your present home loan. These might include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might look into paying points to reduce your interest rate. The money you will save on the life of the mortgage could be substantial if you've paid up front about 3% of the new loan balance. Please consult a tax professional before acting on hear-say that any paid points may be deducted on your federal income taxes.

Another thing about taxes is that if you reduce your interest rate, it follows that you'll also be lowering the paid interest amount that you will be able to deduct on your taxes. This is one more cost that some borrowers take into consideration. Call us at 954-375-7774 to help you do the math.

In the end, for most people the total of up-front costs to refinance are made up very quickly in monthly savings. We can help you explore what your options are, considering the effect a refinance may 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 954-375-7774 to get started.

Curious about refinancing? Give us a call: 954-375-7774.

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