Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least two points under your existing one? Maybe 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 refinanced loan may be worth its cost several times over, factoring in the benefits that it brings, in addition to a lower interest rate.


When you refinance, you might be able to lower your interest rate and mortgage payment , sometimes by a lot. You might also have the option to "cash out" some of the built-up equity in your home, that you will be able use to take care of higher interest debts, improve your home, or finance a vacation. With lower rates, you may also be able to build up home equity faster by moving to a shorter term mortgage.

Expenses and Fees

As you probably know, you'll have to pay for the the refinance process. With your refinance, you're paying for basically the same things you were charged for at the time you got your original mortgage loan. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You might look into paying points to get a better interest rate. The amount you will save on the life of the loan may be substantial if you've paid up front about three percent of the new loan total. You might be told that points may be tax deductible, but as tax regulations can be difficult to keep up with, we urge you to consult with your tax professional before depending on this.

Speaking of taxes, when your interest rate is reduced, of course you will also be lowering the paid interest amount that you will be able to deduct from your taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at 305-800-3863.

Most people find that the savings each month balance out the initial cost of refinancing. We will work with you to figure out which mortgage loan program is ideal for you, considering your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing will have on your taxes. Call us at 305-800-3863 to get you started.

Curious about refinancing your home? Give us a call: 305-800-3863.

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