When is Refinancing Worth it?

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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least 2 points lower than your current rate? Perhaps several years ago that was good advice, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan is often worth its cost several times over, because of the advantages that it brings, as well as a lower interest rate.


When you refinance, you may be able to reduce your interest rate and mortgage payment amount, sometimes considerably. You could also be able to "cash out" a portion of your home equity, that you are able use to consolidate debt, make home improvements, or take a vacation. You could be able to refinance into a shorter-term mortgage program, enabling you to build up your home equity faster.

Fees and Expenses

As you probably know, you'll have some fees and expenses during your process of refinancing. You'll be charged the same kinds of expenses and fees as with your existing home loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying points can get you a lower interest rate. If you pay (on average) 3% of the loan amount at the start, your savings for the life of the new mortgage loan can be substantial. We recommend that you consult with a tax professional before acting on advice that the paid points may be deducted on your taxes.

One more expense that a borrower might take into account is that a lower rate of interest will lower the interest amount you will be able to deduct from your federal income taxes. Call us at (816) 525-8000 & (81 to help you do the math.

Most borrowers find that the monthly savings outweigh the initial cost of refinancing. We will help you find out what loan program is perfect for you, looking at your cash on hand, how likely you are to sell your home in the near future, and how refinancing can effect your taxes. Call us at (816) 525-8000 & (81 to get you started.

Curious about refinancing your home? Call us: (816) 525-8000 & (81.

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