Is Refinancing Worth the Cost?

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Some have said that only when your new interest is at least two points under your current rate, should you refinance your loan. Maybe that was sound advice several years ago, but since refinance costs have been getting lower, it may be time to look into it. Refinancing your mortgage loan has various advantages that can make it worth the up-front cost several times over.

Advantages

When you refinance, you may have the ability to reduce your interest rate and monthly mortgage payment amount, sometimes significantly. You also might have the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you may also get the chance to build up home equity faster by switching to a shorter-term loan.

Fees and Expenses

Of course, you'll have some fees and expenses during your process of refinancing. With your refinance, you're paying for basically the same things you were charged for when you got your current mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Do the Math

You might offer to pay discount points (prepaid interest) to attain a lower rate of interest. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the new mortgage can be great. We recommend that you consult a tax professional before acting on advice that any points paid may be deducted on your federal income taxes.

Another thing about taxes is that once you lower your interest rate, it follows that you'll also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at 425-508-9988.

Most borrowers find that the monthly savings quickly outweigh the initial expenses of refinancing. We'll work with you to determine what program is ideal for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at 425-508-9988 to get you started.

Want to know more about refinancing your home? Call us: 425-508-9988.

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