Ever heard of this?

[r8rpwr]

Here is a link to the IRS website where they discuss costs of refinancing:

http://www.irs.gov/newsroom/article/...106982,00.html

[kelkat]

Points are normal and work for some people. You just have to decide what is best for you. Like someone said earlier "Crunch the numbers"

As for refinancing to get the tax deductions? I have never heard of doing this and would think that it would cost more in the long run. I would crunch those numbers VERY hard.

[ferby03]

Originally Posted by kelkat

As for refinancing to get the tax deductions? I have never heard of doing this and would think that it would cost more in the long run. I would crunch those numbers VERY hard.

Yes, it may seem like a good idea at first if you can save money on your taxes, but if you think about it, you'd probably spend more in interest than you would save. So it's probably not the best idea.

[r8rpwr]

Originally Posted by ferby03

Yes, it may seem like a good idea at first if you can save money on your taxes, but if you think about it, you'd probably spend more in interest than you would save. So it's probably not the best idea.

Exactly. If you spend $1000 more in interest over the year, but get an additional $300 in tax deductions, what's the benefit?

Better to spend less. You'll deduct less, but at the end of the day you are still better off.

[Avian]

Like everyone else said, it will probably be different for each person. Just crunch the numbers and decide what's best for you.

[Raquelita]

I find that trying to figure out whether it is better to pay point or pay a higher interest rate is confusing - it depends on individual factors in your loan and how long you will be paying for. I would talk to your lender or a financially savvy friend and have them run numbers for both scenarios to compare.

[alizee]

There are lot of ways to ones problems and you can solve them easily one you have better suggestions ….like the ones above…keep going mate ;-)

[spencer24]

Originally Posted by ferby03

My husband and I are buying a new house. The place we are buying from got us a "discount" on our interest rate. They negotiated the rate down 2 points with the lender. But, we have to pay an extra $6,000 on our loan for that. If the rate had been higher, we would have paid a lot more in interest over the long term. Has anyone ever heard of this?

Are the $6,000 some kind of fee, which will be put on top of the money you are borrowing? I've never heard of such practice before.

[TheCreditChallenge.com]

Ok, there are a few things to consider here. Basically, you are paying $6000 now to save money in the long run. Here are some questions to ask yourself before agreeing to it.

1. How much will it save you on a monthly basis?
2. How long do you expect to keep the house/mortgage?
3. Realistically, how much will you be able to deduct?

So, here's what I want you to calculate. If you are saving $200 a month from this lower (discounted) rate, then it will take you 30 months, or 2 and a half years to break even. Your savings don't really come until then.

Also, when you look at tax deductions, think about it like this. Should I spend an extra $5000 in interest a year to save $1500 on my taxes? The answer is definitely no under that situation.

Just some things to think about.