Is Refinancing Worth the Cost?

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Some have said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. That may have been valid a while back, but with refinancing dropping in cost over the last few years, it is never the wrong time to consider a new mortgage loan! Refinancing has a number of benefits that can make it worth the initial expenditure a few times over.

Advantages

You could be able to bring down your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced mortgage. You also could have the option of pulling out some of your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage, enabling you to build up your equity faster.

Fees and Expenses

All these advantages do come with some expense, though. When you refinance, you're paying for a lot of the same things you paid for during your original mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying discount points can help you attain a better interest rate. Your savings on the life of the mortgage might be substantial if you have paid up front about three percent of the new loan total. You may hear that these points can be tax deductible, but as tax regulations are ever-changing, we urge you to speak with a tax professional before considering this in your calculations.

Speaking of taxes, when your interest rate is reduced, naturally you will also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is another expense that borrowers take into account. Call us at (718) 639-9500 to help you do the math.

Most borrowers find that the savings per month quickly balance out the initial expenses of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your cash on hand. Call us at (718) 639-9500 to get you started.

Want to know more about refinancing your home? Call us at (718) 639-9500.

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