Tax Tip

I'll try to post some tax tips between now and the end of the year:

Consider refinancing your mortgage this year. Loan fees (i.e. points) are supposed to be deducted over the projected life of the mortgage, but when the loan is paid off early in order to refinance, any remaining points not yet deducted can be deducted in that year. Mortgage refinancing can be a smart move for those of us with higher mortgage interest rates and/or who want to replace an adjustable mortgage with a fixed rate product while rates are still low. In addition, if your home has appreciated since its purchase and you are currently paying for private mortgage insurance, you may no longer be required to carry it if your refinanced loan amount is less than 80% of the home’s current appraised value. Also, if you have had your current loan for some time, a larger portion of your monthly payment applies to the principle, so you have less interest to deduct than you had when you first got the mortgage. If you are among the fortunate who could use additional tax deductions, refinancing your home will mean you’ll have a bigger interest deduction every month, even if your payments stay about the same.