Is Refinancing Worth the Cost?

In the market for a new mortgage loan? We can help! Give us a call at 706-860-5514. Want to get started? Apply Here.

Some have said that only when your new interest will be at least 2 points below your current rate, should you refinance your loan. Maybe several years ago that was wise advice, but as refinance costs have been falling recently, it may be a good time to look into it. Refinancing your mortgage loan has various advantages that often make it worth the initial expenditure many times over.

Benefits

You may be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with your refinanced mortgage loan. You may also be able to "cash out" some of the built-up equity in your home, which you are able use to take care of higher interest debt, improve your home, or take a vacation. With lower rates, you might also be able to build up home equity faster by moving to a shorter-term loan.

Expenses and Fees

Of course, you'll have some fees and expenses during the process of refinancing. You'll pay the same sort of fees as with your existing mortgage loan. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You could need to pay points (prepaid interest) to gain a lower interest rate. When you pay (on average) 3% of the loan amount initially, the savings for the term of the new loan can be great. You might have heard that the points can be tax deductible, but as tax regulations are difficult to keep up with, we urge you to consult with your tax professional before depending on this.

Another cost that borrowers might consider is that a lower rate of interest will reduce the interest amount you will be able to deduct from your federal income taxes. Call us at 706-860-5514 to help you do the math.

Most people find that the monthly savings balance out the up-front cost 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 near future, and your available cash. Call us at 706-860-5514 to get started.

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

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