Is Refinancing Worth the Cost?

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It has been said that only when your new interest is at least 2 points lower, should you refinance your mortgage. That could have been valid years ago, but with refinancing dropping in cost in recent years, it is never the wrong time to consider a new mortgage! A refinanced mortgage loan can be worth its cost several times over, because of the advantages that come, in addition to a reduced interest rate.

Advantages

When you refinance, you could have the ability to lower your interest rate and monthly payment , sometimes significantly. Additionally, you might be given the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build your home equity faster by moving to a shorter-term mortgage loan.

Fees and Expenses

As you probably expect, you will have some fees and expenses during your process of refinancing. When you refinance, you're paying for basically the same things you paid for during your existing mortgage. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might look into paying points to get a lower interest rate. The amount you will save on the life of the loan could be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on hear-say that the paid points can be deducted on your taxes.

An additional expense that a borrower might take into account is that a lower interest rate will reduce the interest amount you'll deduct from your federal income taxes. Call us at (562) 693-5048 to help you do the math.

In the end, for most the amount of initial costs to refinance are paid back soon in monthly savings. We will help you determine what mortgage program is perfect for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and the effect refinancing might have on your taxes. Call us at (562) 693-5048 to get you started.

Want to know more about refinancing? Give us a call: (562) 693-5048.

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