Reasons to re-finance
Fast facts
- Check that interest rates have dropped enough to make the cost of refinancing worthwhile.
- Compare the total costs to refinance, as well as interest rates, to determine if refinancing will save you money.
- Generally, the lower the interest rate, the more points the lending institution will charge.
- Shop around for a lender. Ask each for a list of charges and costs you must pay at closing.
- A lower interest rate gives you less interest to deduct on your income tax, which may increase your tax payments and decrease the total savings from refinancing.
Talk to some lenders to determine the available rates and the costs associated with refinancing. These costs include appraisals, attorney's fees, and points. Then determine what your new payment would be if you refinanced. You can estimate how long it will take to recover the costs of refinancing by dividing your closing costs by the difference between your new and old payments (your monthly savings). However, the ultimate amount you may save depends on many factors, including your total refinancing costs, whether you sell your home in the near future, and the effects of refinancing on your taxes.
