Is Refinancing Worth the Cost?

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It has been said that only when your new interest is at least two points lower, should you refinance your loan. Perhaps that was good advice a number of years ago, but as refinance costs have been getting lower, it could be time to look into it. A refinance is often worth its cost several times over, because of the advantages that it brings, in addition to a reduced interest rate.


You might be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced mortgage. Additionally, you might have the option of tapping into the equity in your home by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build up home equity more quickly by changing to a shorter-term mortgage.

The Cost

All of these advantages do come with some expense, though. When you refinance, you're paying for basically the same things you paid for at the time you got your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can get you a better interest rate. Your savings on the life of the loan could be substantial if you've paid up front about three percent of the new loan total. We recommend that you talk to a tax professional before acting on advice that these paid points can be deducted on your federal income taxes.

An additional cost that a borrower may take into account is that a reduced interest rate will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 706-860-5514.

Most borrowers find that the savings each month quickly outweigh the initial cost of refinancing. We'll help you determine what program is best for you, considering your cash on hand, how likely you are to sell your house in the near future, and how refinancing could effect your taxes. Call us at 706-860-5514 to get you started.

Curious about refinancing your home? Give us a call: 706-860-5514.

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