Did you know that the interest paid on your home mortgage is one of the last allowable tax deductions? If used properly, you can have great benefit from a refinance transaction. Remember, there are always costs to refinance your home mortgage, even if they are described, by some lenders, as a "No-Cost Refinance". It's all in how you wrap the package.
Here are some common thoughts to consider:
- Discount points - What are they and should I pay them? Interest rates can change by the hour. There is always a posted rate that does not have an added cost. This is referred to as the "PAR" rate. As a homeowner, you can opt to pay an additional cost to get a lower interest rate but on a refinance, I wouldn't recommend it.
- Costs - These should be separated into two different categories: True Closing Costs and Prepaid Expenses.. They both represent money out of your pocket but one is a true cost of obtaining new financing and the other represents dollars needed to be collected to set up your escrow account.
- What are your goals - This is important for you to consider. Should you pay mortgage insurance? Would you prefer to pay your loan off sooner and pay less, overall, interest? Is withdrawing equity (sometimes called "Cash-Out") an important factor.
At Home Mortgage Management, after finding out about your current financial status, we want to hear from you and We Listen.
