Should I Refinance my Mortgage?

refinance-mortgage  The old rule is that you should refinance only if you can lower your interest rate by two percentage points. But it may be worth doing for less, depending on how long you plan to stay in the house.

There are drawbacks to refinancing. Even ifyou do it with the same lender, you'll have the same expenses and hassles as when you applied for your current mortgage. Once again, you'll pay for an appraisal, credit report, tide searches, etc.

 Ask the lender if any of the existing documents the survey, for example will still pass muster. Points charged on a refinance aren't fully tax-deductible in the year you pay them, but can be amortized over the life of the loan. You can probably forgo your own lawyer this time, but you still have to pay the bank's lawyer.

 Comparison shop among lenders over the telephone or on your computer. Add up the total cost of the best deal and divide it by the amount you'll save every month with the lower interest rate. If it costs $2,000 to refinance, for example, and you reduce your monthly payment by $200, you'll make the cost back in 10 months. Even if you plan to be in the house for only another two years, that's worthwhile: You'll recover the cost of refinancing and pocket $2,800 ($200 a month for 14 months) before you move.

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