When is Refinancing Worth it?

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Ever heard the old rule of thumb that states you should only refinance if the new interest rate is at least two points under your present one? That could have been accurate a while back, but as refinancing has been costing less recently, it's never the wrong time to consider a new loan! A refinanced mortgage loan may be worth its cost many times over, factoring in the benefits that come, in addition to a lower interest rate.

Benefits from Refinancing

You could be able to bring down your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced mortgage. You may also have the ability to "cash out" some of the built-up equity in your home, which you will be able use to consolidate debt, add on to your home, or take a vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to build your equity quicker.

The Cost

As you probably know, you will have some fees and expenses during the the refinance process. When you refinance, you are paying for many of the same things you paid for during your current mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying points can result in a better interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the new mortgage can be substantial. Please consult with a tax professional before acting on rumors that the points paid can be deducted on your federal income taxes.

Another expense that a borrower might consider is that a lower rate of interest will lower the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at 561-395-4264.

Most borrowers find that the savings each month balance out the up-front cost of a refinance. We can help you find out your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 561-395-4264 to get started.

Curious about refinancing? Give us a call: 561-395-4264.


Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486