When is Refinancing Worth it?

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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your mortgage. That may have been true years ago, but with refinancing dropping in cost recently, it is a good time to think about a new mortgage loan! A refinance is often worth its cost many times over, considering the benefits that it brings, in addition to a reduced interest rate.

Benefits

When you refinance, you may be able to lower the interest rate and monthly mortgage payment amount, sometimes by a lot. You may also have the ability to "cash out" some of the built-up equity in your home, which you may use to consolidate debts, make home improvements, or finance a vacation. You could have the option to refinance to a shorter-term mortgage loan, enabling you to build up your equity quicker.

The Cost

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

Doing the Math

Paying discount points can get you a lower interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, the savings for the life of the new mortgage can be great. Please consult with a tax professional before acting on hear-say that any paid points may be deducted on your taxes.

Another expense that a borrower might take into account is that a lower rate of interest will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 720-598-8300.

Most borrowers find that the savings each month balance out the initial cost of refinancing. We can help you find out what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 720-598-8300 to get started.

Curious about refinancing? Give us a call: 720-598-8300.

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