Is Refinancing Worth the Cost?

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Some have said that only when your new interest is at least 2 points lower, should you refinance your loan. That could have been accurate years ago, but with refinancing dropping in cost in recent years, it is never the wrong time to think about a new mortgage loan! Refinancing has a variety of advantages that will often make it worth the initial cost a few times over.


When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment amount, sometimes considerably. You might also be able to "cash out" some of the built-up equity in your residence, that you may use to consolidate debts, improve your home, or plan a vacation. With reduced interest rates, you might also get the chance to build your home equity faster by switching to a shorter-term mortgage.

Fees and Expenses

As you probably expect, you will have some fees and expenses during the process of refinancing. When you refinance, you are paying for basically the same things you were charged for during your original mortgage. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Doing the Math

Paying points can result in a better interest rate. When you pay (on average) three percent of the loan amount up front, your savings for the term of the new loan can be significant. We recommend that you talk to a tax professional before acting on advice that these points paid may be deducted on your taxes.

An additional expense that borrowers may consider is that a reduced interest rate will reduce the interest amount you'll be able to deduct on your taxes. Call us at 516-431-2009 to help you do the math.

All things considered, for most borrowers the amount of up-front costs to refinance are paid back very quickly in savings each month. We'll help you find out what program is perfect for you, considering your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing will probably have on your taxes. Call us at 516-431-2009 to get started.

Want to know more about refinancing your home? Give us a call: 516-431-2009.

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