When is Refinancing Worth it?

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It has been said that only in the case your new interest is at least two points lower, should you refinance your mortgage. Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it could be time to look into it. Refinancing has some benefits that will often make it worth the initial expenditure several times over.

Benefits

When you refinance, you could have the ability to lower the interest rate and monthly mortgage payment , sometimes considerably. You could also have the option to "cash out" some of your equity, that you will be able use to consolidate debts, add on to your home, or take a vacation. With lower interest rates, you might also get the chance to build up home equity faster by switching to a shorter term mortgage loan.

Expenses and Fees

As you probably know, you'll have to pay for the process of refinancing. You will have the same kinds of expenses and fees as with your existing mortgage. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

Do the Math

You might look into paying points to reduce your interest rate. When you pay (on average) 3% of the mortgage loan amount up front, your savings for the life of the new mortgage loan can be great. Please talk to a tax professional before acting on advice that any points paid can be deducted on your federal income taxes.

Another cost that a borrower might consider is that a lower interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at (650) 689-5684.

Most people find that the monthly savings quickly balance out the initial expenses of refinancing. We can help you figure out your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at (650) 689-5684 to get started.

Curious about refinancing your home? Call us: (650) 689-5684.

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