OT: mortgage refi / tax deductibility

[Ozz]

So, I've been seeing mortgage rates below 3% lately and thinking about whether a refinance would make sense.

We are about 5 years into current mortgage, and it qualifies so that we can deduct the mortgage interest on our taxes.

If we refi (no cash out) will we still be able to deduct the interest paid, or do we lose that option?

Thanks!

[cp43]

Originally Posted by Ozz

So, I've been seeing mortgage rates below 3% lately and thinking about whether a refinance would make sense.

We are about 5 years into current mortgage, and it qualifies so that we can deduct the mortgage interest on our taxes.

If we refi (no cash out) will we still be able to deduct the interest paid, or do we lose that option?

Thanks!

My understanding is that you don't lose anything (tax wise) if you refi.

It may not matter, they changed the tax code, and even though our loan qualifies, we were better off taking the standard dedcuction the last couple years.

BTW, thanks for the reminder, I need to check on rates and see if I should refi.

Chris

[C40_guy]

Originally Posted by Ozz

So, I've been seeing mortgage rates below 3% lately and thinking about whether a refinance would make sense.

We are about 5 years into current mortgage, and it qualifies so that we can deduct the mortgage interest on our taxes.

If we refi (no cash out) will we still be able to deduct the interest paid, or do we lose that option?

Thanks!

We refinanced in January, moving from a 20 to 15 year fixed, just above where the 15 year fixed rates are now.

Interest is interest, so yes, your mortgage interest is deductible.

If you pay points on a refi, however, these generally aren't deductible the year after the refi, but have to be allocated over the life of the loan.

There are a couple of quirks -- if you make improvements with some of the money, you can deduct a portion of the points.

[ox_rider]

After the 2017 tax revision, max loan size for deduction is $750,000. As someone else mentioned, if you take the standard deduction, there is little reason to focus on whether you can deduct interest. If you are 5 years in and your goal is to some day pay off the loan, see if you can switch to a 25 or 20 year amortization schedule so you won't lose ground.

PM me if you have more questions. I talk about this all day long.

[tuxbailey]

Definitely.

As above said, unless you don't plan to pay off then it is good to refi.

But even if you want to keep the same terms, lower rate means you will have less payments per month.

Just shop around and make sure you don't have to pay closing.I refinanced couple months ago, probably should have waited a bit more

[C40_guy]

Originally Posted by tuxbailey

Just shop around and make sure you don't have to pay closing.I refinanced couple months ago, probably should have waited a bit more

Moving from 2.875% (January rate) on our 15 year fixed to the current available 2.625% was only $40 or $50 or so difference monthly, if I remember correctly....

[prototoast]

Yes, you can still deduct mortgage interest after a refinance. The amount of interest will (presumably) be lower, so your overall deduction will be smaller, but it doesn't change the tax treatment.

[robt57]

Just remember if you do not write check out for all the closing costs, you are in fact cashing out. Then the closing costs and point being deductible VS paying the interest on that money for the term is something to think about and see the math going in.

[Alstra]

Man, in case the mortgage percent is lower than 3% and you do not actually lose anything while you refi .... I guess you can give it a go. I mean, you do not lose anything, even more, you will be able to save up more money as you will be getting a lower interest rate. I do not really think that there is anything that can go bad with this mortgage refi process. In case you are not sure, and kind of afraid, you can actually call for the services of the best Mortgage Broker Leicester and they will help you, they will provide you with all the info you need.

[Blue Jays]

Watching this thread. I will similarly be contemplating looking into refi.
Will need to determine if it is worth the hassle, paperwork, and fees.

[Hellgate]

When I moved this summer I got 2.86 on a VA 30 yr fixed for $585.

I got a refi offer of 1.98 VA 30 yr fixed for 2 points.

[markie]

I am refinancing right now. I was on a 30 year at 4% and I am going to 15 year at 2.125%, no points. I want to generate more equity/pay off the house so I can retire to somewhere cheaper. I don’t think interest rates are going much lower.

[aaronka]

Who are folks using to get great rates? 2.125% 15 years no points seems a great deal.

[prototoast]

I use the CreditKarma loan search to find good rates, and also am in the process of getting a 2.125% 15y loan with no points.

[markie]

I used the local mortgage place in my town, I think I just had lucky timing at the start of the year. Rates seemed to have headed up a little, but not a lot.