When is Refinancing Worth it?

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Some have said that only if your new interest will be at least 2 points below your current rate, should you refinance your mortgage. That could have been true years ago, but with refinancing dropping in cost recently, it's a good time to consider a new loan! Refinancing has various advantages that often make it worth the up-front cost several times over.

Benefits from Refinancing

You might be able to bring down your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with your refinanced mortgage loan. Additionally, you might be given the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage program, enabling you to build up your home equity quicker.

Fees and Expenses

All these benefits do come with some expense, though. You'll have to pay the same sort of fees as you did with your present mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might investigate paying points to receive a lower interest rate. When you pay (on average) three percent of the loan amount at the start, your savings for the term of the new loan can be substantial. Please consult a tax professional before acting on advice that any 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 reducing the paid interest amount that you'll be able to deduct from your taxes. This is one more expense that some borrowers consider. Call us at (904) 342-3622 to help you do the math.

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

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

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