When is Refinancing Worth it?

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It has been said that only when your new interest will be at least two points under your current rate, should you refinance your loan. That could have been true a while back, but with refinancing dropping in cost recently, it's a good time to explore the options of a new loan! Refinancing your mortgage has a variety of advantages that often make it worth the up-front cost several times over.


When you refinance, you may be able to lower your interest rate and monthly mortgage payment , perhaps considerably. Additionally, you may be given the option of pulling out some of your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You might have the option to refinance to a shorter-term mortgage program, enabling you to build your home equity quicker.

Expenses and Fees

All of these advantages do come with some expense, though. You will have the same types of expenses and fees as with your current mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You could offer to pay points (prepaid interest) to attain a more favorable interest rate. Your savings on the life of the mortgage might be substantial if you have paid up front about 3% of the new loan total. Please talk to a tax professional before acting on advice that any paid points can be deducted on your federal income taxes.

Another cost that a borrower might consider is that a lower interest rate will reduce the interest amount you'll be able to deduct from your federal income taxes. Call us at (662) 429-5100 to help you do the math.

All things considered, for most the amount of initial costs to refinance are paid back soon in monthly savings. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. 

Want to know more about refinancing? Call us at (901) 240-0758