Is Refinancing Worth the Cost?

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Ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least 2 points lower than your present rate? That may have been good advice a while back, but with the fact that refinancing has been costing less over the last few years, it is never the wrong time to consider a new loan! A refinance may be worth its cost several times over, factoring in the advantages that it brings, along with a reduced interest rate.


When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment amount, perhaps significantly. You could also have the ability to "cash out" some of the built-up equity in your residence, which you may use to take care of higher interest debts, make home improvements, or finance a vacation. With reduced interest rates, you may also get the chance to build your home equity faster by moving to a shorter term mortgage loan.

The Cost

All these benefits do cost something, though. When you refinance, you are paying for basically the same things you were charged for at the time you obtained your current mortgage. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying discount points can help you get a better interest rate. The amount you'll save over the life of the mortgage loan may be significant if you have paid up front about three percent of the new loan balance. We recommend that you consult a tax professional before acting on hear-say that any paid points can be deducted on your taxes.

Another cost that a borrower might take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct from your taxes. Call us at (334) 285-8850 to help you do the math.

Most borrowers find that the savings each month quickly outweigh the up-front cost of a refinance. We can help you find out your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at (334) 285-8850 to get you started.

Want to know more about refinancing? Call us: (334) 285-8850.

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