Weighing the Options of Refinancing

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Have you ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points below your current one? That might have been true a while back, but with refinancing dropping in cost in recent years, it is a good time to explore the options of a new mortgage! Refinancing your mortgage has some advantages that will often make it worth the up-front expenditure many times over.


When you refinance, you could be able to lower your interest rate and mortgage payment amount, perhaps by a lot. You also could have the option of pulling out some of the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity quicker.

Expenses and Fees

As you probably know, you will have to pay for your process of refinancing. You will have the same sort of expenses and fees as you did with your existing mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

You might offer to pay discount points (prepaid interest) to get a more favorable rate of interest. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the refinanced loan can be substantial. Please consult with a tax professional before acting on advice that these paid points can be deducted on your federal income taxes.

One more cost that borrowers may take into account is that a reduced interest rate will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at 3032282254.

Most borrowers find that the savings per month quickly outweigh the initial cost of refinancing. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at 3032282254 to get you started.

Want to know more about refinancing? Call us at 3032282254.

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Firelight Mortgage Consultants

Company NMLS#: 381658

7887 East Belleview Ave Ste 1100
Englewood, CO 80111