looking for a loan wants to know how to get the best mortgage rates
in Virginia. Here's a tip: When rates fall steadily, refinancing
your mortgage may make sense, even if you have done so once already.
Case in point:
Bob and Michelle Barbo of Kirkland, Wash. refinanced their mortgage
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 your mortgage, 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.