Is Refinancing Worth the Cost?

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Have you ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate will be at least two points under your present rate? Maybe several years ago that was good advice, but since refinance costs have been getting lower, it could be time to take a serious look. A refinanced mortgage is often worth its cost many times over, factoring in the advantages that come, along with a lower interest rate.


You could be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage loan. You also may have the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build your home equity faster by switching to a shorter-term mortgage.

Fees and Expenses

All these advantages do cost something, though. You'll have to pay the same kinds of expenses and fees as you did with your current home loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Do the Math

Paying points can get you a better interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the refinanced loan can be substantial. We recommend that you consult with a tax professional before acting on rumors that any paid points can be deducted on your taxes.

Another thing about taxes is that once you lower your interest rate, naturally you'll also be reducing the interest amount that you will be able to deduct on your taxes. This is one more cost that borrowers take into consideration. We can help you do the math! Call us at (707) 252-2700.

Most borrowers find that the monthly savings outweigh the initial cost of refinancing. We can help you find out your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at (707) 252-2700 to get started.

Want to know more about refinancing? Give us a call: (707) 252-2700.

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