What does it cost to refinance? What are the benefits?
Ever heard the old rule of thumb, you should only refinance if your new interest rate is at least two points lower? That is a guideline that should never be followed. The true value of a refinance is dependent on many factors: your short and longterm housing goals, your current interest rate and loan balance, and several other considerations. We will prepare a free, no obligation break even analysis to make your savings or lack thereof very black and white. Refinancing has a number of benefits that often make it worth the up-front expenditure many times over. Our goal is to do what is best for you and service your highest needs to earn your business for life!
When you refinance, you might be able to lower your interest rate and monthly payment -- sometimes significantly. You might also be able to "cash out" some of the built-up equity in your home, which you can use to consolidate debt, improve your home, take a vacation -- whatever! With lower rates and balances, you might also be able to build up home equity faster with a shorter-term new mortgage.
All these benefits do cost something, though. When you refinance, you're paying for most of the same things you paid for when you obtained your original mortgage. These might include settlement costs and other fees, an appraisal, lender's title insurance, underwriting fees, and so on.
Ultimately, for most people the amount of up-front costs to refinance are made up very quickly in monthly savings. We'll work with you to determine what program is best for you, considering your cash on hand, and how likely you are to sell your home in the near future.