Weighing the Options of Refinancing

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Have you ever heard the old rule of thumb that states you should only refinance if your new interest rate is at least two points below your existing rate? Perhaps that was sound advice a number of years ago, but as refinance costs have been falling recently, it could be a good time to look into it. A refinance may be 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 lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage loan. You could also be able to "cash out" some of your home equity, which you are able use to take care of higher interest debt, make home improvements, or plan a vacation. With lower interest rates, you might also be able to build your home equity faster by moving to a shorter term mortgage.

The Cost

Of course, you will have to pay for your the refinance process. You'll pay the same sort of fees as you did with your present home loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying discount points can result in a lower interest rate. When you pay (on average) 3% of the mortgage loan amount up front, the savings for the life of the new mortgage can be substantial. You may have heard that points can be tax deductible, but because tax regulations can be ever-changing, we urge you to consult your tax professional before depending on this.

Speaking of taxes, once you bring down your interest rate, naturally you will also be lowering the interest amount that you will be able to deduct on your taxes. This is another cost that borrowers take into consideration. We can help you do the math! Call us at 504-866-5626.

Most people find that the savings per month outweigh the up-front expenses of refinancing. We can help you find out your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at 504-866-5626 to get started.

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

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