Is Refinancing Worth the Cost?

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Some have said that only if your new interest is at least two points under your current rate, should you refinance your loan. Perhaps that was sound advice a number of years ago, but as refinance costs have been getting lower, it could be a good time to look into it. A refinanced mortgage loan may be worth its cost many times over, factoring in the advantages that may come, as well as a reduced interest rate.


When you refinance, you might have the ability to reduce the interest rate and monthly payment , sometimes by a lot. Additionally, you may have the option of pulling out some of the equity in your home by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage program, giving you the ability to add to your home equity faster.

The Cost

All these benefits do come with some expense, though. You'll have to pay the same sort of fees as you did with your existing home loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to reduce your interest rate. Your savings over the life of the loan might be significant if you've paid up front about 3% of the new loan total. Please talk to a tax professional before acting on advice that any paid points may be deducted on your taxes.

An additional expense that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 3032282254.

Most people find that the monthly savings balance out the initial cost of a refinance. We'll work with you to determine which loan program is ideal for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and what effect refinancing might have on your taxes. Call us at 3032282254 to get started.

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

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Firelight Mortgage Consultants

Company NMLS#: 381658

7887 East Belleview Ave Ste 1100
Englewood, CO 80111