Is Refinancing Worth the Cost?

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing your mortgage has a number of benefits that often make it worth the initial cost several times over.

Benefits

When you refinance, you may have the ability to reduce the interest rate and monthly payment amount, sometimes considerably. You may also be able to "cash out" some of the built-up equity in your residence, that you are able use to take care of higher interest debts, improve your home, or plan a vacation. You might have the option to refinance to a shorter-term mortgage program, enabling you to build your home equity faster.

Fees and Expenses

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

Do the Math

Paying points can help you attain a lower interest rate. When you pay (on average) 3% of the loan amount at the start, the savings for the term of the refinanced mortgage can be substantial. Please consult a tax professional before acting on advice that any paid points may be deducted on your taxes.

Speaking of taxes, once you reduce your interest rate, it follows that you will also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is one more expense that some borrowers consider. Call us at (303) 228-2254 to help you do the math.

In the end, for most the amount of initial costs to refinance will be made up soon in monthly savings. We'll help you figure out what program is best for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and how refinancing may effect your taxes. Call us at (303) 228-2254 to get you started.

Curious about refinancing? Call us: (303) 228-2254.

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