Is Refinancing Worth the Cost?

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It has been said that only when your new interest will be at least 2 points below your current rate, should you refinance your mortgage. Maybe that was good advice a number of years ago, but as refinance costs have been getting lower, it may be time to take a serious look. Refinancing your loan has a variety of advantages that can make it worth the initial cost many times over.


You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced mortgage loan. Additionally, you may be given the option of tapping into the equity in your property by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build up home equity faster by switching to a shorter-term loan.

Expenses and Fees

As you probably expect, you'll have some fees and expenses during the the refinance process. You will have to pay the same kinds of fees as with your present mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

Paying discount points can result in a better 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 loan can be great. Please consult a tax professional before acting on hear-say that the paid points can be deducted on your federal income taxes.

An additional cost that a borrower might take into account is that a reduced interest rate will reduce the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at (240) 428-1650.

Most borrowers find that the savings per month balance out the initial cost of a refinance. We'll work with you to determine which program is right for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing can effect your taxes. Call us at (240) 428-1650 to get started.

Please note that depending on current interest rates and the loan program you select, refinancing to obtain a lower monthly payment may result in higher total finance charges over the life of the loan.


Want to know more about refinancing your home? Give us a call: (240) 428-1650.