Is Refinancing Worth the Cost?

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Ever hear the old rule of thumb that states you should only refinance if the new interest rate is at least 2 points lower than your existing rate? Perhaps several years ago that was sage advice, but since refinance costs have been falling recently, it may be time to look into it. A refinanced mortgage may be worth its cost several times over, considering the advantages that may come, along with a lower interest rate.


You may be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage loan. You may also have the option to "cash out" some of your equity, which you may use to take care of higher interest debt, add on to your home, or plan a vacation. You might have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your equity faster.

The Cost

Of course, you'll have to pay for your process of refinancing. You will pay the same kinds of expenses and fees as with your present mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying points can help you get a better interest rate. The money you'll save over the life of the loan might be significant if you have paid up front about three percent of the new loan total. Please consult a tax professional before acting on hear-say that any points paid can be deducted on your federal income taxes.

One more cost that borrowers may consider is that a reduced interest rate will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 303-840-7424.

Ultimately, for most the amount of initial costs to refinance are made up very quickly in monthly savings. We can help you figure out your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 303-840-7424 to get started.

Want to know more about refinancing your home? Call us at 303-840-7424.