Is Refinancing Worth the Cost?

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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least two points lower than your existing rate? That could have been true a while back, but with refinancing dropping in cost in recent years, it's a good time to consider a new mortgage loan! Refinancing your mortgage loan has a variety of benefits that will often make it worth the initial expenditure a few times over.


You might be able to lower your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced loan. You may also be able to "cash out" some of your equity, that you will be able use to take care of higher interest debts, add on to your home, or finance a vacation. You could be able to refinance to a shorter-term mortgage program, enabling you to build up your home equity quicker.

Fees and Expenses

Of course, you'll have some fees and expenses during the the refinance process. You will be charged the same sort of fees as with your present mortgage. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can help you attain a lower interest rate. If you pay (on average) 3% of the loan amount at the start, your savings for the life of the refinanced loan can be substantial. You may be told that the points can be tax deductible, but because tax regulations can be ever-changing, please speak with your tax professional before considering this in your calculations.

One more cost that a borrower might consider is that a reduced rate of interest will reduce the interest amount you'll deduct from your taxes. Call us at (415) 244-9383 to help you do the math.

Most borrowers find that the savings each month quickly outweigh the initial cost of refinancing. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at (415) 244-9383 to get you started.

Curious about refinancing? Give us a call: (415) 244-9383.

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Dick Lepre NMLS #302379

LendUS, LLC dba RPM Mortgage - NMLS ID #1938

3240 Stone Valley Road West
Alamo, CA 94507