Is Refinancing Worth the Cost?

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It has been said that only in the case your new interest is at least two points lower, should you refinance your mortgage. Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it could be a good time to look into it. Refinancing your mortgage has some advantages that often make it worth the initial expenditure several times over.

Benefits from Refinancing

You might be able to lower your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced loan. You may also have the ability to "cash out" some of the built-up equity in your home, which you may use to take care of higher interest debts, add on to your home, or plan a vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by moving to a shorter term mortgage.

The Cost

As you probably know, you will have some fees and expenses during your process of refinancing. You will have the same kinds of expenses and fees as with your current mortgage. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying points can result in a lower interest rate. When you pay (on average) 3% of the loan amount up front, the savings for the term of the refinanced loan can be great. You may have heard that the points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, we urge you to consult your tax professional before depending on this.

One more expense that a borrower might take into account is that a reduced rate of interest will reduce the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 503-657-3311.

Most borrowers find that the savings per month quickly balance out the up-front expenses of refinancing. We will help you figure out what loan program is ideal for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and the effect refinancing might have on your taxes. Call us at 503-657-3311 to get you started.

Want to know more about refinancing your home? Call us: 503-657-3311.