When is Refinancing Worth it?

It has been said that only when your new interest will be at least two points below your current rate, should you refinance your loan. That could have been true a while back, but with the fact that refinancing has been costing less recently, it is never the wrong time to explore the options of a new mortgage! A refinance is often worth its cost several times over, because of the advantages that it brings, in addition to a lower interest rate.

Advantages of Refinancing

When you refinance, you might be able to lower the interest rate and mortgage payment , perhaps by a lot. You may also have the ability to "cash out" a portion of the built-up equity in your residence, which you can use to take care of higher interest debt, make home improvements, or take a vacation. With reduced interest rates, you might also be able to build up home equity more quickly by switching to a shorter term mortgage.

The Cost

Of course, you will have to pay for your the refinance process. With your refinance, you're paying for basically the same things you paid for at the time you got your existing mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.