Weighing the Options of Refinancing

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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate will be at least 2 points below your existing one? Maybe that was sound advice a number of years ago, but as refinance costs have been falling recently, it may be time to look into it. Refinancing your mortgage has a variety of benefits that can make it worth the initial expenditure several times over.


When you refinance, you may be able to reduce your interest rate and mortgage payment amount, perhaps significantly. You may also have the option to "cash out" some of your home equity, that you are able use to take care of higher interest debts, improve your home, or plan a vacation. With reduced interest rates, you may also be able to build your home equity faster by changing to a shorter-term mortgage.

Expenses and Fees

All of these advantages do cost something, though. You'll have the same sort of expenses and fees as with your current mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can get you a lower interest rate. When you pay (on average) 3% of the loan amount initially, your savings for the life of the new mortgage loan can be significant. Please talk to a tax professional before acting on rumors that the paid points may be deducted on your federal income taxes.

An additional expense that borrowers might take into account is that a lower rate of interest will lower the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at (203) 526-9345.

Most people find that the savings per month outweigh 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 might be to sell in the next couple of years, and your available cash. Call us at (203) 526-9345 to get you started.

Want to know more about refinancing your home? Call us at (203) 526-9345.

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