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Finding the best refinance mortgage rate can be a daunting task. It is much easier to simply identify the lowest interest rate. One’s ideal refinance mortgage rate should correlate with how long they plan to hold onto their mortgage and keep ownership of their property.
With this in mind, one should determine what refinance mortgage rate is best for them by figuring out if they want to pay point and fees or purchase the property in question. It is actually better to deduct points and fees because they have a favorable tax treatment in purchase transactions. This is much more favorable than refinancing.
In refinancing, the deduction of points is typically amortized throughout the life of the loan and is not reduced in the year they are paid as is typically the case in a purchase. Amortize means to reduce the value of an asset by prorating costs over a period of years.
The annual percentage rate is another key way to figure out the best refinance mortgage rate. The APR compares numerous loans by examining the total cost of the loan.
|Jennifer Mathes, Ph.D.|