Weighing the Options of Refinancing

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Ever hear the old rule of thumb that states you should only refinance if your new interest rate is at least 2 points under your current one? That might have been accurate years ago, but since refinancing has been costing less recently, it's never the wrong time to think about a new mortgage loan! Refinancing your mortgage loan has various benefits that can make it worth the up-front cost a few times over.


You might be able to lower your interest rate (sometimes substantially) and make smaller mortgage payments with your refinanced mortgage. Additionally, you 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 reduced interest rates, you may also get the chance to build your home equity more quickly by moving to a shorter-term loan.

Fees and Expenses

As you probably know, you'll have to pay for your process of refinancing. You will pay the same sort of expenses and fees as with your current mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might consider paying points to be given a better interest rate. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the refinanced loan can be significant. You might be told that these points can be tax deductible, but because tax regulations can be ever-changing, please consult with a tax professional before depending on this.

Another cost that a borrower might consider is that a reduced rate of interest will lower the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (904) 342-3622.

In the end, for most the amount of up-front costs to refinance will be made up soon in savings each month. We will help you determine what loan program is ideal for you, considering your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing might have on your taxes. Call us at (904) 342-3622 to get started.

Want to know more about refinancing? Call us: (904) 342-3622.

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2800 North Fifth Street Suite 301B
St. Augustine, FL 32084