Is Refinancing Worth the Cost?

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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate will be at least two points under your existing rate? Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it could be time to look into it. A refinanced mortgage loan can be worth its cost many times over, factoring in the benefits that come, as well as a reduced interest rate.

Benefits

When you refinance, you could have the ability to reduce the interest rate and mortgage payment , perhaps considerably. You could also have the ability to "cash out" some of the built-up equity in your residence, that you may use to consolidate debts, add on to your home, or take a vacation. With lower rates, you might also be able to build your home equity more quickly by switching to a shorter-term loan.

Fees and Expenses

As you probably know, you'll have to pay for the process of refinancing. With your refinance, you're paying for basically the same things you paid for at the time you got your current mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Do the Math

Paying discount points can result in a lower interest rate. Your savings on the life of the loan could be significant if you've paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on hear-say that the paid points can be deducted on your federal income taxes.

One more expense that borrowers may consider is that a reduced rate of interest will lower the interest amount you will deduct from your federal income taxes. Call us at (513) 713-1515 to help you do the math.

Most borrowers find that the monthly savings quickly outweigh the up-front cost of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at (513) 713-1515 to get started.

Curious about refinancing your home? Give us a call at (513) 713-1515.

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