When is Refinancing Worth it?

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Have you ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least 2 points below your current one? That could have been accurate years ago, but with refinancing dropping in cost recently, it is a good time to think about a new mortgage! A refinanced loan is often worth its cost several times over, considering the advantages that may come, along with a lower interest rate.


When you refinance, you could be able to lower your interest rate and monthly mortgage payment , perhaps considerably. You also might have the option of tapping into your home equity by "cashing out" some funds to renovate 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 build up your home equity quicker.

Fees and Expenses

Of course, you'll have to pay for your process of refinancing. With your refinance, you are paying for most of the same things you paid for during your existing mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can result in a lower interest rate. Your savings over the life of the mortgage could be significant if you've paid up front about three percent of the new loan total. Please consult with a tax professional before acting on hear-say that the paid points may be deducted on your federal income taxes.

Speaking of taxes, once your interest rate is reduced, naturally you will also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is another cost that some borrowers consider. Call us at 425-508-9988 to help you do the math.

Most people find that the savings per month quickly outweigh the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 425-508-9988 to get you started.

Want to know more about refinancing? Call us at 425-508-9988.

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