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Question for the Money Doctors

Question submitted on Jan 21, 2021.

Question

In your home mortgage refinance calculator, there is a question on Other Closing Cost fees. Do we include Pre Paid Interest and 6 months of Property Tax escrow also in this. Are these counted as fees ??

I have 2 options to refinance my investment property which is currently at 4.5 APR. I plan to keep the property for 5 years. Tax bracket is 24%. Which one of the below options do I choose

1. Get low rate of 2.87% for 30 years, 0 points and pay higher fees of $5600 (includes all types of fees loan origination, prepaid interest property tax 6 months escrow, title, etc.)

2. Get higher rate of 3.62% for 30 years, 0 points and pay lower fees of $2700 (includes all types of fees loan origination, prepaid int, tax escrow, title, etc.)

3. 3rd option is to pay down the principal by say $5600 which is what i would spend on closing costs and and not refinance

Appreciate and Thank you for your advise.

Answer

Yes you include the closing costs. The taxes Are included in your tax calculation. 

Take  option 1.  Then when you are done pay it it off. 


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