Is Refinancing Worth the Cost?

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It has been said that only in the case your new interest will be at least two points below your current rate, should you refinance your loan. That could have been true years ago, but as refinancing has been costing less over the last few years, it's never the wrong time to consider a new mortgage! Refinancing has a variety of benefits that often make it worth the up-front cost a few times over.


You could be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced mortgage loan. Additionally, you could be given the option of pulling out some of your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You could have the option to refinance to a shorter-term mortgage program, giving you the ability to build your equity faster.

The Cost

As you probably expect, you will have some fees and expenses during your process of refinancing. When you refinance, you are paying for basically the same things you paid for during your current mortgage loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Doing the Math

Paying discount points can get you a better interest rate. If you pay (on average) 3% of the loan amount up front, the savings for the life of the new mortgage loan can be substantial. We recommend that you talk to a tax professional before acting on rumors that these points paid may be deducted on your federal income taxes.

Speaking of taxes, once your interest rate is reduced, it follows that you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 504-866-5626.

Most borrowers find that the savings each month quickly balance out the initial cost of refinancing. We will work with you to determine which mortgage program is ideal for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing might have on your taxes. Call us at 504-866-5626 to get started.

Curious about refinancing? Call us at 504-866-5626.

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