Refinance Once, Twice
When rates fall steadily, refinancing may make sense even if you have done so once
already. Bob and Michelle Barbo of Kirkland, Wash. refinanced twice within three months in
1998. In October, they trimmed the rate on their 30-year
fixed mortgage by a full point -- from 9.13% to 8.13% -- for a monthly savings of $63.
Plus, because home prices in their area had boosted their home equity, they were
able to stop paying private mortgage insurance that cost them $120 a
month.
To exploit continued decline in rates, the Barbos refinanced again in December.
Their new 30-year fixed mortgage is at 7.375%, lopping another $55 off their monthly bill.
Since the couple had chosen a no-cost refinancing each time, their
total out-of-pocket expenses came to just $400 in appraisal fees. So by the time you read
this, they will already have recouped their up front costs. "Now we can use the
savings to build up a cash emergency fund," says Bob.
If you are considering a second refinancing, don't overlook this potential tax write-off:
When you pay points to refinance, you must deduct the amount over the life of the loan,
usually 30 years. But when you refinance a second time, all of the points that have not
yet been deducted from the first refinancing can be written off in a lump sum. Say
you refinanced to a 30-year mortgage in 1993 and paid $3,000 in points. By now, you would
have written off roughly $500. If
you refinance again this year, you could deduct the remaining $2,500 on your 1998 tax
return. For a homeowner in the 28% tax bracket, that works out to a savings of $700 --
enough to offset some or all of your costs this time around.
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REFINANCE
Refinance Considerations
Refinance Once, Then Do It Again
Build Home Equity Faster
Get Your Hands on Some Cash
Trade your ARM for Fixed Rates
Mortgage Refinance Costs
Analyze Your Savings
Paying Points For A Lower Rate
Your Personal Income Taxes
Consider Other Mortgage Programs
Deciding To Refinance |
