Weighing the Options of Refinancing

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Ever heard the old rule of thumb that states you should only consider refinancing if your new interest rate will be at least two points below your present rate? That could have been accurate a while back, but with refinancing dropping in cost recently, it's never the wrong time to consider a new mortgage! A refinance is often worth its cost many times over, because of the benefits that come, as well as a lower interest rate.


When you refinance, you could have the ability to lower your interest rate and mortgage payment , sometimes significantly. You may also be able to "cash out" a portion of your equity, which you can use to take care of higher interest debts, improve your home, or finance a vacation. With reduced rates, you might also be able to build your home equity more quickly by switching to a shorter-term mortgage loan.

Fees and Expenses

As you probably know, you will have to pay for the the refinance process. With your refinance, you're paying for basically the same things you were charged for when you obtained your original mortgage. These can include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might consider paying points to receive a better interest rate. When you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the new mortgage can be great. We recommend that you talk to a tax professional before acting on advice that these points paid can be deducted on your federal income taxes.

Another expense that borrowers may take into account is that a reduced interest rate will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at (216) 524-8500.

In the end, for most borrowers the total of up-front costs to refinance are made up very quickly in monthly savings. We'll help you determine which mortgage program is ideal for you, looking at your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing will have on your taxes. Call us at (216) 524-8500 to get you started.

Curious about refinancing? Call us: (216) 524-8500.