Is Refinancing Worth the Cost?

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Some have said that only when your new interest will be at least 2 points under your current rate, should you refinance your loan. Perhaps several years ago that was sage advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing your mortgage loan has a variety of advantages that can make it worth the up-front expenditure many times over.


When you refinance, you might be able to lower your interest rate and mortgage payment amount, sometimes considerably. You may also have the option to "cash out" some of the built-up equity in your home, that you will be able use to consolidate debt, improve your home, or take a vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to build your home equity quicker.

The Cost

All of these benefits do cost something, though. With your refinance, you're paying for a lot of the same things you paid for when you obtained your original mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying points can help you attain a better interest rate. Your savings on the life of the mortgage may be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult with a tax professional before acting on rumors that the points paid can be deducted on your federal income taxes.

Speaking of taxes, if your interest rate is reduced, of course you'll also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into account. We can help you do the math! Call us at (904) 342-3622.

Most borrowers find that the savings each month outweigh the up-front expenses of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at (904) 342-3622 to get started.

Want to know more about refinancing your home? Give us a call: (904) 342-3622.

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