Is Refinancing Worth the Cost?

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It has been said that only if your new interest will be at least two points lower, should you refinance your loan. That could have been accurate a while back, but as refinancing has been costing less over the last few years, it's never the wrong time to think about a new mortgage loan! Refinancing has a variety of advantages that will often make it worth the up-front expenditure a few times over.


You could be able to bring down your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced mortgage. You also might have the option of pulling out some of the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build your home equity faster by moving to a shorter term loan.

The Cost

As you probably know, you'll have some fees and expenses during your the refinance process. You'll have to pay the same types of expenses and fees as you did with your current mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying discount points can help you get a lower interest rate. The money you will save on the life of the mortgage may be substantial if you've paid up front about three percent of the new loan balance. We recommend that you talk to a tax professional before acting on rumors that these paid points may be deducted on your taxes.

An additional expense that borrowers might take into account is that a lower rate of interest will reduce the interest amount you'll deduct from your taxes. Call us at (718) 639-9500 to help you do the math.

Ultimately, for most the amount of initial costs to refinance will be paid back soon in monthly savings. We'll help you figure out which loan program is perfect for you, considering your cash on hand, the likelihood of selling your residence in the near future, and how refinancing will effect your taxes. Call us at (718) 639-9500 to get started.

Want to know more about refinancing your home? Give us a call: (718) 639-9500.

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