Mortgage Origination Points for your Mortgage are Tax Deductible, you can purchase them when buying or refinancing your home you can write them off.
Home Mortgage Points can be bought for a home purchase or a home refinancing. A point is 1% of your loan amount. One point on a $250,000- loan amount is $2500 or buying 2 points would cost you $5000. No matter how many points you buy they are all tax deductible. My “rule of thumb” is 1 point of origination will buy your rate down .25% – .375%
Hypothetical Rate Quote
- 30 year fixed at 5% or 30 year fixed at 4.75% with 1 point of origination
- 5/1 ARM at 4% or 5/1 ARM at 3.625% with 1 point of origination
Loan amount, rates, and payments need to be taken into consideration.
Mortgage Points As A Write Off
Mortgage points are ONLY deductible on your primary residence. You may not write them off if you buy them for a second home or a investment property. So remember only deductions can be used on a owner occupied dwelling. Writing off your point(s) is one way to get the maximum deduction on your home purchase. Also, please don’t forget to think about buying a point(s) when you refinance your current home mortgage because that is also a write off.
Three Questions That You Need To Ask Yourself
- Can you afford the point(s) of Mortgage Origination?
- Could you benefit from the Write Off?
- Can you afford to Purchase the Point(s) of Origination?
I would certinaly recommend buy origination these days! Why? Because Mortgage Interest Rates are near all time lows!!! But, can you afford them and how long will you be in your current home for?
A great Q and A from Bankrate.com on the subject
http://www.bankrate.com/brm/itax/tax_adviser/20060621a1.asp
bc@Smarterborrwing.com 617.771.5021
bc@smarterborrowing.com
617.771.5021
