When is Refinancing Worth it?

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Some have said that only in the case your new interest will be at least 2 points below your current rate, should you refinance your loan. That may have been accurate years ago, but since refinancing has been costing less in recent years, it's never the wrong time to consider a new mortgage! Refinancing has some benefits that can make it worth the initial expenditure several times over.

Advantages

When you refinance, you could be able to lower your interest rate and monthly mortgage payment amount, sometimes considerably. You might also have the option to "cash out" a portion of your equity, that you will be able use to consolidate debt, improve your home, or take a vacation. You could have the option to refinance to a shorter-term mortgage, enabling you to build your home equity quicker.

Expenses and Fees

All of these benefits do cost something, though. With your refinance, you are paying for basically the same things you were charged for during your existing mortgage. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Doing the Math

Paying discount points can help you attain a lower interest rate. The amount you'll save over the life of the mortgage loan could be significant if you've paid up front about 3% of the new loan balance. Please talk to a tax professional before acting on hear-say that the points paid may be deducted on your federal income taxes.

Speaking of taxes, once you reduce your interest rate, naturally you will also be lowering the interest amount that you may deduct on your taxes. This is another cost that borrowers consider. Call us at 503-657-3311 to help you do the math.

Most people find that the monthly savings quickly balance out the up-front expenses of refinancing. We can help you find out your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your available cash. Call us at 503-657-3311 to get you started.

Curious about refinancing your home? Call us: 503-657-3311.