Is Refinancing Worth the Cost?

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Some have said that only if your new interest is at least two points lower, should you refinance your mortgage. That might have been accurate years ago, but with the fact that refinancing has been costing less in recent years, it's a good time to consider a new mortgage loan! A refinanced mortgage loan may be worth its cost many times over, factoring in the advantages that it brings, along with a lower interest rate.

Advantages of Refinancing

When you refinance, you might be able to reduce the interest rate and monthly mortgage payment amount, sometimes significantly. You also may be given the option of pulling out some of your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to add to your home equity faster.

Expenses and Fees

Of course, you will have some fees and expenses during the process of refinancing. You'll have the same sort of expenses and fees as you did with your existing mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might consider paying points to reduce your interest rate. Your savings on the life of the mortgage loan may be substantial 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 these paid points can be deducted on your federal income taxes.

Another thing about taxes is that if you reduce your interest rate, naturally you'll also be reducing the interest amount that you will be able to deduct on your federal income taxes. This is one more expense that borrowers take into consideration. Call us at 503-657-3311 to help you do the math.

Most borrowers find that the monthly savings outweigh the initial cost of refinancing. We will help you find out which mortgage program is best for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and the effect refinancing might have on your taxes. Call us at 503-657-3311 to get started.

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