Is Refinancing Worth the Cost?

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Ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least 2 points lower than your present one? Perhaps that was sound advice a number of years ago, but as refinance costs have been getting lower, it may be a good time to look into it. A refinance is often worth its cost several times over, because of the benefits that it brings, as well as a lower interest rate.


You may be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with your refinanced mortgage. You also might be given the option of tapping into the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to build up your home equity quicker.

The Cost

All these advantages do cost something, though. With your refinance, you're paying for basically the same things you paid for during your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can result in a better interest rate. When you pay (on average) 3% of the loan amount up front, your savings for the life of the refinanced loan can be significant. You might have heard that points may be tax deductible, but because tax regulations can be ever-changing, please speak with a tax professional before depending on this.

One more cost that a borrower might consider is that a lower rate of interest will reduce the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at 504-866-5626.

Most borrowers find that the monthly savings quickly balance out the up-front expenses of a refinance. 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 504-866-5626 to get started.

Want to know more about refinancing your home? Call us: 504-866-5626.

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