Is Refinancing Worth the Cost?

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It has been said that only when your new interest is at least two points lower, should you refinance your mortgage. Maybe several years ago that was sage advice, but as refinance costs have been getting lower, it may be time to look into it. Refinancing has a number of advantages that can make it worth the initial cost a few times over.

Benefits

When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment amount, sometimes by a lot. You also might have the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. With reduced rates, you might also be able to build up home equity more quickly by changing to a shorter term loan.

Expenses and Fees

As you probably know, you'll have to pay for the the refinance process. With your refinance, you're paying for a lot of the same things you paid for during your existing mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might consider paying points to reduce your interest rate. The money you will save over the life of the mortgage loan may be significant if you have paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on rumors that the paid points can be deducted on your federal income taxes.

Speaking of taxes, if your interest rate is lowered, naturally you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is one more cost that some borrowers consider. Call us at (303) 862-7760 to help you do the math.

Most people find that the savings each month quickly outweigh the initial expenses of a refinance. We'll help you determine what mortgage program is ideal for you, considering your cash on hand, how likely you are to sell your house in the near future, and how refinancing may effect your taxes. Call us at (303) 862-7760 to get you started.

Want to know more about refinancing? Give us a call at (303) 862-7760.