When is Refinancing Worth it?

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Some have said that only in the case your new interest is at least 2 points below your current rate, should you refinance your mortgage. Perhaps several years ago that was wise advice, but since refinance costs have been falling recently, it may be a good time to look into it. A refinance can be worth its cost many times over, factoring in the benefits that come, along with a reduced interest rate.


You might be able to bring down your interest rate (sometimes significantly) and make smaller mortgage payments with a refinanced loan. Additionally, you might have the option of tapping into the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also be able to build your home equity faster by moving to a shorter term mortgage loan.

Expenses and Fees

All these benefits do come with some expense, though. With your refinance, you are paying for most of the same things you were charged for when you obtained your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might think about paying points to reduce your interest rate. If you pay (on average) three percent of the loan amount up front, the savings for the life of the refinanced loan can be substantial. We recommend that you consult with a tax professional before acting on rumors that these paid points can be deducted on your federal income taxes.

Another cost that a borrower may consider is that a lower interest rate will lower the interest amount you will deduct on your federal income taxes. Call us at 6507631924 to help you do the math.

Most borrowers find that the savings per month outweigh the initial cost of refinancing. We'll help you determine what loan program is best for you, looking at your cash on hand, how likely you are to sell your house in the near future, and how refinancing will effect your taxes. Call us at 6507631924 to get you started.

Want to know more about refinancing? Give us a call: 6507631924.

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Norcal Capital Group, Inc

1369 El Camino Real
Millbrae, CA 94030