Is_It_ReFi_Time

							Title:
Is It ReFi Time

Word Count:
704

Summary:
The precise moment to refinance a home is complicated to figure out.
However, it is undeniable that such a moment will arrive, probably
several times over the course of a 30 year mortgage. Just be prepared to
act when the time comes.


Keywords:
refi, refinance


Article Body:
Millions of people are taking advantage of the current opportunity to
refinance the mortgage on their homes. Rising home prices combined with
falling interest rates have motivated people to convert their accumulated
home equity into expendable funds. This frequently works to their
immediate advantage, giving them a considerably lower interest rate and
lower monthly mortgage payments.

Homeowners can choose either to spend or save the portion of their
incomes that are no longer being spent on mortgage payments.

When Should You Refinance?

In some cases, when refinancing, it helps to borrow more than is needed
to pay off the earlier mortgage. This gives you the equity from your
home, plus extra funds to cover the transaction costs of refinancing.
People use the funds for a variety of purposes: to make home
improvements, to repay older debts, or to buy goods, services or assets
they couldn't otherwise afford.

How much can you save by refinancing? This depends on several factors
relating to your present mortgage situation. If your new interest rate is
low, it can result in substantial savings, perhaps even thousands of
dollars. And when rates rise, having refinanced from a variable rate loan
to a conventional loan, you can stand to gain substantially.

Some Benefits Of Refinancing

Refinance a home mortgage is a big decision and should be approached with
careful consideration of the potential costs and benefits. Clearly, when
interest rates on mortgages fall below the rate on your existing loan,
it's time to consider refinancing. This is the time to evaluate your
potential after-tax savings from lower monthly payments, and compare it
with the after-tax expenses of refinancing. These expenses include
mortgage fees or points, application fees and appraisal fees. As the loan
is repaid, the savings from your lower interest payments begin to
accumulate. The savings due to refinancing must be discounted at the
present rate and compared with the transaction or closing costs.

If you're considering refinancing your home, you need to evaluate your
current interest rate. If your new interest rate would be more than 5/8%
lower than your current interest rate, it is well worth refinancing. But
if you want to keep your closing costs as low as possible, see that your
new interest rate is at least 1% lower.

Why Refinance?

Most people who refinance do so to save money, but there are other
reasons to do so. If you refinance your existing loan at a lower rate of
interest, you can end up with a lower monthly mortgage payment. This can
save you funds in the long run.

Debt Consolidation

 In many cases, you can clear all your outstanding debts and replace them
with just one low-cost monthly outlay. Refinancing your home to
consolidate your debts (such as a credit card balance or a student loan)
can save you money in the short run and the long run, because you'll be
paying on a low-interest loan rather than a high-interest one.

Tax Advantages

If you have lower interest rates, it means smaller interest deductions on
Schedule A. You are allowed to deduct interest on a debt of up to $1
million incurred to buy your primary residence and one more home. Also
deductible is the interest on up to $100,000 of home equity loans for
these two residences. If you refinance a mortgage, the interest on this
loan is deductible to the limit of old mortgage plus $100,000.

The interest charges you pay up-front, or points, are really interest
that's pre-paid and must therefore be deducted proportionately during the
tenure unless you have purchased or improved your existing principal
property.

If you have bought investment real estate or a vacation home, you can
deduct points proportionately over the loan term. If you have refinanced
a mortgage on which you already had been reducing points proportionately,
you could be eligible for a tax bonus. Now you can subtract any part of
the points for the mortgage already paid off that you had not yet
deducted since the year of refinancing.

The precise moment to refinance a home is complicated to figure out.
However, it is undeniable that such a moment will arrive, probably
several times over the course of a 30 year mortgage. Just be prepared to
act when the time comes.