Is Refinancing Worth the Cost?

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Ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least two points below your existing rate? Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it could be a good time to look into it. A refinance is often worth its cost many times over, because of the advantages that it brings, along with a reduced interest rate.


You may be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage. Additionally, you may have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also be able to build up home equity more quickly by moving to a shorter-term mortgage.

Fees and Expenses

As you probably expect, you'll have to pay for your process of refinancing. You will have the same sort of fees as with your existing mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Do the Math

Paying points can result in a lower interest rate. Your savings over the life of the loan may be significant if you have paid up front about three percent of the new loan balance. We recommend that you consult a tax professional before acting on advice that these points paid can be deducted on your taxes.

One more expense that a borrower might take into account is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 512-302-9410.

In the end, for most people the total of up-front costs to refinance will be paid back soon in savings each month. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at 512-302-9410 to get started.

Curious about refinancing? Give us a call: 512-302-9410.

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