Is Refinancing Worth the Cost?

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It has been said that only if your new interest will be at least two points below your current rate, should you refinance your loan. That might have been good advice years ago, but with refinancing dropping in cost over the last few years, it's a good time to explore the options of a new mortgage! A refinance is often worth its cost several times over, considering the benefits that it brings, along with a reduced interest rate.


When you refinance, you could have the ability to lower the interest rate and mortgage payment , perhaps by a lot. You may also be able to "cash out" a portion of your equity, which you will be able use to consolidate debt, add on to your home, or take a vacation. You could be able to refinance into a shorter-term mortgage, enabling you to build up your equity quicker.

Expenses and Fees

All of these benefits do come with some expense, though. You will have to pay the same types of expenses and fees as with your existing mortgage. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Doing the Math

Paying discount points can result in a better interest rate. Your savings on the life of the loan might be significant if you've paid up front about three percent of the new loan total. We recommend that you talk to a tax professional before acting on hear-say that these points paid may be deducted on your federal income taxes.

Speaking of taxes, if you bring down your interest rate, it follows that you will also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is another expense that borrowers take into account. Call us at (860) 658-7100 to help you do the math.

Most borrowers find that the monthly savings balance out the initial expenses of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at (860) 658-7100 to get started.

Curious about refinancing? Give us a call: (860) 658-7100.