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Tips > Tax Planning
Tips Disclaimer
These tips contain information that may change over time as a result of new tax legislation. Although we make efforts to keep this information current, you should check with your tax advisor before taking action based upon any information contained in these tips.
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Refinancing Your Home
Below are a few pointers to keep in mind when refinancing.
- If there is a good possibility that you’ll move within 10 years, consider a 5-year or 7-year adjustable rate mortgage (ARM). The interest paid over the time you actually live in your home will likely be less than with a 30-year fixed-rate loan, since you pay a premium to lock in the long-term rate.
- Any fees paid on your refinance should be recouped within two years via a lower interest rate.
- Watch out for pre-payment penalties on your existing loan.
- Request a lower reissue rate for title insurance.
Tips on Points
- Points paid on a refinance aren’t deductible in the year of the refinance. Instead, they are deducted over the life of the loan. Here’s an example: You pay $7,000 in points (also known as loan discount fees) to reduce the interest rate on your loan. If your loan is amortized over 30 years, you’ll only be able to deduct $233 per year.
- If you paid points on your last refi, when the loan is refinanced again, you can deduct all unamortized points in the year refinanced.
- We generally recommend avoiding points on a refinance.
- In contrast to a refinance, points paid to purchase a new home can be deducted in the year of purchase.
Tips Disclaimer
These tips contain information that may change over time as a result of new tax legislation. Although we make efforts to keep this information current, you should check with your tax advisor before taking action based upon any information contained in these tips.