Refinancing an Existing Home Mortgage

As we discussed above, if you have purchased a home and financed it through a fixed rate mortgage, you are in a dilemma if the market rate of interest has declined since you locked in your higher fixed rate.  A very common resolution of this dilemma is to refinance the mortgage at the then lower market rate of interest. Recall that on page 19 of the Tax Planning section of the book we noted the fact that points paid on a refinanced home mortgage are not fully deductible in the year in which they are paid.  Therefore, as you shop the mortgage market for an appropriate refinancing loan, you will want to strongly consider a low or no point mortgage since the points are not currently deductible.