When is Refinancing Worth it?

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Ever hear the pearl of wisdom that states you should only refinance if your new interest rate is at least 2 points under your present one? Perhaps that was sound advice several years ago, but as refinance costs have been getting lower, it could be a good time to take a serious look. A refinance is often worth its cost several times over, considering the advantages that may come, in addition to a reduced interest rate.


When you refinance, you could have the ability to reduce the interest rate and monthly payment , perhaps significantly. You may also be able to "cash out" some of your home equity, which you can use to consolidate debts, improve your home, or plan a vacation. With lower interest rates, you might also be able to build up home equity more quickly by moving to a shorter-term loan.

Expenses and Fees

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

Do the Math

You might investigate paying points to receive a lower interest rate. Your savings over the life of the mortgage could be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on advice that these points paid may be deducted on your taxes.

An additional expense that borrowers might consider is that a lower rate of interest will reduce the interest amount you'll be able to deduct on your taxes. Call us at 603-893-6616 to help you do the math.

Most borrowers find that the monthly savings balance out the up-front 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 603-893-6616 to get started.

Want to know more about refinancing? Call us: 603-893-6616.

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