Neither of these is entirely accurate. The decision to refinance a home should be based on whether you will own the property long enough to recapture the expenses connected with the new loan.

The procedure can be as simple as subtracting the proposed new house payment from the existing payment to find out what the monthly savings will be. Then, divide the monthly savings into the cost of refinancing to determine the recapture point in months.

If you are planning to stay in the home at least that long, then in most cases, you should refinance. The only exception is when the existing mortgage is in the last few years of its life. It could be amortizing very fast. Usually this will not occur unless you are in the last quarter of the loan life.

When refinancing a home, the points paid to acquire the loan, as well as the loan origination fee, cannot be fully written off as interest in the year that it is paid. They must be spread over the life of the mortgage.

For this reason, you will probably be better off in getting a "par value" loan , meaning there will be few or no points charged. Even though the rate will be higher, the interest is fully deductible as long as the federal limits are not exceeded. You can also keep the cash in your account to earn interest.

For more information call Richard Morse, your real estate professional, at (800) 946-3895.