Is Refinancing Worth the Cost?

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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least 2 points under your existing one? That may have been accurate years ago, but with refinancing dropping in cost recently, it's never the wrong time to consider a new mortgage loan! A refinanced loan is often worth its cost several times over, because of the advantages that come, as well as a reduced interest rate.


When you refinance, you could have the ability to lower the interest rate and monthly payment , sometimes significantly. You also might be given the option of pulling out some of the equity in your house by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also get the chance to build your home equity faster by switching to a shorter-term mortgage.

The Cost

All of these benefits do come with some expense, though. You'll be charged the same sort of fees as you did with your present home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You might investigate paying points to receive a reduced interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the new mortgage can be significant. 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 you lower your interest rate, naturally you'll also be lowering the interest amount that you'll be able to deduct on your taxes. This is another expense that some borrowers take into account. Call us at (904) 342-3622 to help you do the math.

In the end, for most the amount of up-front costs to refinance will be paid back very quickly in savings each month. We can help you figure out your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at (904) 342-3622 to get started.

Curious about refinancing? Call us: (904) 342-3622.

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