When is Refinancing Worth it?

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe several years ago that was sage advice, but since refinance costs have been getting lower, it may be time to take a serious look. A refinance can be worth its cost several times over, considering the advantages that can come, along with a reduced interest rate.


When you refinance, you might have the ability to reduce the interest rate and mortgage payment amount, sometimes significantly. You also might have the option of tapping into the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage, enabling you to build your home equity faster.

The Cost

All these benefits do come with some expense, though. You will have the same types of fees as with your existing home loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might investigate paying points to reduce your interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, your savings for the life of the refinanced mortgage can be great. Please consult with a tax professional before acting on rumors that these points paid can be deducted on your taxes.

Speaking of taxes, once your interest rate is reduced, it follows that you will also be reducing the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that some borrowers take into consideration. Call us at (434) 975-5626 to help you do the math.

Most borrowers find that the savings per month quickly outweigh the up-front expenses of refinancing. We can help you figure out your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at (434) 975-5626 to get started.

Want to know more about refinancing your home? Give us a call: (434) 975-5626.

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