Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points below your current rate, should you refinance your loan. That might have been accurate years ago, but with refinancing dropping in cost recently, it's a good time to explore the options of a new loan! Refinancing your mortgage has a number of advantages that often make it worth the initial expenditure several times over.


You could be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced loan. You might also be able to "cash out" some of your home equity, that you will be able use to take care of higher interest debts, add on to your home, or finance a vacation. You might have the option to refinance to a shorter-term mortgage, enabling you to build up your home equity quicker.

Expenses and Fees

All these advantages do cost something, though. When you refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

Do the Math

You might offer to pay points (prepaid interest) to get a more favorable interest rate. Your savings over the life of the mortgage may be substantial if you have paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on rumors that these paid points may be deducted on your federal income taxes.

Another thing about taxes is that if your interest rate is lowered, naturally you will also be reducing the interest amount that you can deduct from your taxes. This is another expense that some borrowers consider. We can help you do the math! Call us at 3032282254.

In the end, for most the amount of up-front costs to refinance are paid back very quickly in savings each month. We can help you explore what your options are, considering the effect a refinance might 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.

Curious about refinancing your home? Call us: 3032282254.

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Firelight Mortgage Consultants

Company NMLS#: 381658

7887 East Belleview Ave Ste 1100
Englewood, CO 80111