Is Refinancing Worth the Cost?

Curious about refinancing your home? Give us a call at 307-732-3053.

Ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least 2 points below your present rate? Maybe several years ago that was sage advice, but since refinance costs have been getting lower, it may be a good time to look into it. A refinance is often worth its cost several times over, factoring in the benefits that may come, as well as a lower interest rate.

Advantages

You could be able to lower your interest rate (sometimes significantly) and make smaller mortgage payments with a refinanced mortgage. Additionally, you may be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You may be able to refinance into a shorter-term mortgage, giving you the ability to add to your equity faster.

The Cost

All of these benefits do cost something, though. When you refinance, you're paying for most of the same things you were charged for during your current mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

You may have to pay a penalty if you refinance your existing mortgage loan too soon. It depends on the terms of your current loan. However, the penalties may apply just to the initial couple of years of the mortgage loan. We will help you figure it out: contact us at 307-732-3053.

Do the Math

Paying points can result in a better interest rate. When you pay (on average) three percent of the loan amount up front, the savings for the term of the new loan can be substantial. We recommend that you talk to a tax professional before acting on advice that the paid points can be deducted on your taxes.

Speaking of taxes, once your interest rate is reduced, naturally you will also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is another expense that borrowers consider. We can help you do the math! Call us at 307-732-3053.

All things considered, for most the total of initial costs to refinance will be paid back very quickly in savings each month. We can help you find out your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 307-732-3053 to get you started.

Looking for mortgage advice? We will be glad to help! Call us at 307-732-3053. Ready to begin? Apply Online Now.