Is Refinancing Worth the Cost?

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Some have said that only if your new interest will be at least two points below your current rate, should you refinance your mortgage. That might have been good advice a while back, but with refinancing dropping in cost recently, it is a good time to consider a new loan! A refinance is often worth its cost many times over, considering the advantages that may come, as well as a reduced interest rate.


You may be able to lower your interest rate (sometimes significantly) and make smaller mortgage payments with your refinanced mortgage loan. You might also be able to "cash out" a portion of the built-up equity in your home, which you can use to consolidate debt, improve your home, or take a vacation. You could have the option to refinance into a shorter-term mortgage loan, enabling you to build up your home equity quicker.

Fees and Expenses

All these advantages do come with some expense, though. When you refinance, you are paying for a lot of the same things you paid for during your original mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might think about paying points to receive a reduced interest rate. The money you'll save over the life of the mortgage may be significant if you have paid up front about three percent of the new loan total. You might hear that the points can be tax deductible, but as tax regulations are difficult to keep up with, we urge you to speak with a tax professional before considering this in your calculations.

An additional cost that a borrower might take into account is that a reduced rate of interest will lower the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at 6507631924.

Most people find that the monthly savings quickly balance out the up-front cost of refinancing. We will help you figure out which program is perfect for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing might effect your taxes. Call us at 6507631924 to get started.

Want to know more about refinancing? Call us at 6507631924.

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Norcal Capital Group, Inc

1369 El Camino Real
Millbrae, CA 94030