Post-Purchase FAQ

Frequently Asked Questions

Does refinancing affect the interest rate on my mortgage?

Most likely. If it will be higher or lower depends on the market and current mortgage rates. Sometimes you will benefit greatly, that’s why refinancing is so popular when rates are especially low.

Lower interest can substantially reduce how much you pay in interest over the life of your loan. Conversely, if current rates are higher than they were when you got your original mortgage, your credit score has dropped, your debt to income ratio is worse, or you only qualify for certain types of sub-prime-like loans, your interest will be higher and the transaction may not be financially wise.

How would refinancing affect my taxes?

Typically refinancing will not alter your income tax one way or another.

If you take out cash and increase your principal, you may pay more interest on your mortgage annually, but that interest would be deductible. If a larger tax payment would challenge your ability to make higher mortgage payments, consult a tax professional with these types of questions if you would be challenged to make higher monthly mortgage payments.

For an added bonus, points and other loan expenses can be deducted from taxes in a refinance. The points will be amortized over the length of the loan.

If the company which gave me my loan sells it to another servicer, will the new company change my interest rate?

No. To avoid predatory lending scams, don’t send any payments to the new loan servicer until you get a letter from the original lender letting you know that the loan has been moved to another lenders. For added insurance, give your first lender a call to confirm the transfer.

For answers to more questions on how to manage your debt and continue to make timely mortgage payments, schedule an appointment with one of our HUD-certified housing specialists by calling 800.750.2227 (CCCS).