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Refinance Once Then Do It Again

When rates fall steadily, refinancing may make sense even if you have done so once already. Bob and Michelle Barbo of Kirkland, WA 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.



PRMI NMLS No. 3094. Branch NMLS 252910. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification. This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas. Alabama Banking Department Bureau of Banking MC 20316. Arkansas Securities Department 11558. Florida Office of Financial Regulation MLD646. Department of Banking and Finance 6521. Office of Financial Institutions #771. Missouri Division of Finance. Mississippi Department of Banking and Consumer Finance, 3094. Oklahoma Department of Consumer Credit ML010027. Department of Financial Institutions 109282.

PRMI NMLS No. 3094. Branch NMLS 252910. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification. This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas. Alabama Banking Department Bureau of Banking MC 20316. Arkansas Securities Department 11558. Florida Office of Financial Regulation MLD646. Department of Banking and Finance 6521. Office of Financial Institutions #771. Missouri Division of Finance. Mississippi Department of Banking and Consumer Finance, 3094. Oklahoma Department of Consumer Credit ML010027. Department of Financial Institutions 109282.