Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least 2 points below your current one? Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it may be a good time to take a serious look. A refinance is often worth its cost several times over, because of the benefits that it brings, along with a reduced interest rate.


When you refinance, you may have the ability to reduce the interest rate and monthly mortgage payment , perhaps by a lot. Additionally, you could have the option of tapping into the equity in your home by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage, giving you the ability to build your equity quicker.

Fees and Expenses

All of these advantages do cost something, though. When you refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying points can result in a better interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the new mortgage loan can be substantial. You might be told that the points can be deducted on your income taxes, but because tax regulations can be difficult to keep up with, we urge you to consult your tax professional before depending on this.

Another thing about taxes is that once you reduce your interest rate, of course you will also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is another cost that borrowers take into consideration. We can help you do the math! Call us at (816) 525-8000 & (81.

All things considered, for most the amount of initial costs to refinance will be made up soon in monthly savings. We will work with you to find out what program is best for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and the effect refinancing could have on your taxes. Call us at (816) 525-8000 & (81 to get started.

Want to know more about refinancing your home? Call us at (816) 525-8000 & (81.

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