Is Refinancing Worth the Cost?

It has been said that only when your new interest is at least 2 points lower, should you refinance your loan. That could have been true years ago, but since refinancing has been costing less over the last few years, it is never the wrong time to think about a new mortgage! Refinancing your mortgage loan has a variety of benefits that will often make it worth the up-front expenditure several times over.

Benefits

When you refinance, you may have the ability to reduce your interest rate and monthly payment , perhaps significantly. You also may have the option of pulling out some of the equity in your property by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage loan, giving you the ability to build your equity faster.

The Cost

Of course, you'll have some fees and expenses during your the refinance process. With your refinance, you're paying for many of the same things you were charged for at the time you got your existing mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

When you refinance your present mortgage loan too quickly, you may have a penalty to pay. It depends on the rules of your current mortgage loan. However, this type of penalty might apply just to the initial several years of the mortgage. We'll help you figure it out: contact us at (914) 287-2405.

Doing the Math

Paying points can result in a lower interest rate. Your savings on the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan balance. We recommend that you talk to a tax professional before acting on rumors that the points paid may be deducted on your taxes.

Speaking of taxes, once your interest rate is reduced, naturally you'll also be lowering the interest amount that you may deduct from your taxes. This is one more expense that some borrowers take into consideration. Call us at (914) 287-2405 to help you do the math.

Ultimately, for most people the total of initial costs to refinance will be paid back very quickly in monthly savings. We'll work with you to determine which loan program is best for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing may effect your taxes. Call us at (914) 287-2405 to get started.