When is Refinancing Worth it?

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Ever hear the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points under your existing rate? That might have been true years ago, but with refinancing dropping in cost in recent years, it's a good time to consider a new loan! Refinancing has some benefits that will often make it worth the initial cost a few times over.


When you refinance, you might have the ability to reduce the interest rate and monthly mortgage payment amount, perhaps by a lot. Additionally, you might have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to build your home equity quicker.

The Cost

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

Do the Math

Paying points can get you a better interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the life of the refinanced loan can be substantial. You may have heard that points can be tax deductible, but as tax regulations are ever-changing, please consult with a tax professional before making decisions based on this.

Another expense that a borrower might consider is that a lower rate of interest will reduce the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 4056158543.

Most borrowers find that the savings each month balance out the initial cost of a refinance. We can help you explore your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at 4056158543 to get you started.

Want to know more about refinancing? Give us a call: 4056158543.

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Executive Lending Group

A Division of 1st Capital Mortgage LLC

2401 Tee Circle, STE 102B
Norman, OK 73069