When is Refinancing Worth it?

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It has been said that only if your new interest will be at least two points under your current rate, should you refinance your loan. That could have been valid years ago, but since refinancing has been costing less recently, it's never the wrong time to consider a new mortgage loan! Refinancing has a number of advantages that often make it worth the up-front cost a few times over.

Advantages

You could be able to lower your interest rate (sometimes significantly) and make smaller monthly payments with your refinanced mortgage loan. You may also have the ability to "cash out" some of the built-up equity in your home, which you may use to take care of higher interest debts, add on to your home, or finance a vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity faster.

The Cost

All of these advantages do cost something, though. You will pay the same sort of fees as with your present mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying points can result in a better interest rate. If you pay (on average) three percent of the loan amount initially, the savings for the term of the refinanced mortgage can be significant. Please talk to a tax professional before acting on advice that any points paid can be deducted on your taxes.

An additional cost that a borrower may consider is that a lower interest rate will lower the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 504-866-5626.

Most people find that the savings per month quickly outweigh the initial cost of a refinance. We'll work with you to determine which loan program is the best fit for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and what effect refinancing will probably have on your taxes. Call us at 504-866-5626 to get you started.

Curious about refinancing your home? Give us a call: 504-866-5626.

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