Is Refinancing Worth the Cost?

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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. That might have been sound advice years ago, but with the fact that refinancing has been costing less over the last few years, it's never the wrong time to consider a new mortgage loan! Refinancing your loan has various benefits that will often make it worth the initial cost many times over.

Benefits from Refinancing

You could be able to bring down your interest rate (sometimes significantly) and have smaller monthly payments with a refinanced mortgage. You may also have the option to "cash out" a portion of the built-up equity in your home, which you will be able use to take care of higher interest debt, add on to your home, or plan a vacation. With lower rates, you might also get the chance to build your home equity faster by moving to a shorter term mortgage.

Fees and Expenses

All these advantages do cost something, though. With your refinance, you are paying for a lot of the same things you paid for during your existing mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might look into paying points to receive a lower interest rate. Your savings over the life of the mortgage may be significant if you've paid up front about three percent of the new loan balance. You might hear that these points can be tax deductible, but as tax regulations can be ever-changing, please speak with your tax professional before making decisions based on this.

Another thing about taxes is that if your interest rate is reduced, it follows that you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers take into consideration. Call us at 718-441-7000 to help you do the math.

Most people find that the monthly savings quickly balance out the up-front expenses of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at 718-441-7000 to get started.

Want to know more about refinancing? Call us: 718-441-7000.

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