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Mortgage Refinancing: Taxes Tips

Apr 17, 2008
The goals of refinancing a mortgage loan include lowering monthly payments and finding reduced interest rates. Lower interest rates may not save as much money over a long term versus a short-term refinance. Your savings may be impacted based on the total amount of the loan, available interest rates and loan duration.

Savings deserve consideration when dealing with the realm of refinancing loans and paying taxes. Taxes paid on your mortgage provide an automatic itemized deduction when preparing tax returns. Refinancing may decrease the taxes on the loan itself and reduce the deduction received on your tax return. This may decrease the amount of your return.

Overall, any deduction is a good deduction when dealing with the government. Check with your accountant or tax preparer to find out if refinancing is going to move you into a higher tax bracket. In some cases, refinancing changes the reductions associated with various tax brackets.

An accountant or a tax preparation specialist may be the best way to deal with pending tax deductions and the impact to your financial well being. When you are making the decision about whether or not to refinance an existing mortgage loan it is a good idea to have a specialist available.

Talk also to your friends, coworkers and family for advice. Surely several people you know have availed themselves of such services and they will be a wealth of good information that can help you make the right decision for you.

If for some reason using a tax preparation specialist or accountant is not an option for you, you do have the option of using one of many free tax calculators that are widely available online. By doing nothing more than entering a few lines of information about your situation, you will have a fair idea of the potential for savings should you decide to refinance your mortgage loan as well as the amount of possible tax deductions.

Though they can be reasonably accurate, don't rely too specifically on the results of online tax calculators as they are only a tool. Only a professional tax preparer or accountant can give you the exact figures relating to your savings and tax deduction amounts. Still, using such a tool can be invaluable in helping you make the decision about whether or not to refinance at all.

Everyone knows that taxes are important. Taxes in mortgage refinancing are equally as important and should carry as much weight as the refinance interest rate or the loan amount, because taxes and tax deduction amounts on your refinance could easily mean the difference between staying in your current tax bracket or being forced into a higher one. A tax preparation specialist or online tax calculator can make the decision much easier.
About the Author
Want to know more about mortgage refinancing? Check out www.allaboutmortgagerefinancing.com and find out about Consolidating Debt by Refinancing Your Second Mortgage and other related subjects.
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