Tips: After you buy a home

 

Mortgage interest is the interest you pay on your loan. If you itemize your deductions on schedule A (form 1040), you can deduct your entire mortgage interest. However, your deduction may be limited if your total mortgage balance is more than $ 1 million or you take out the mortgage for reasons other than to buy, build or improve your home. (Source: IRS publication 530)

 

1. IRS publication 530 – Tax Information for first time homeowners and IRS publication 936 – Home Mortgage Interest Deduction are excellent resources on tax guidance for first time home owners and mortgage interest. We have included copies of both in the Mantra Extras section under ‘Forms’. You can also access them on the IRS website at www.irs.gov.

 

2. The tax module of anawise.com report prepares an estimate of the first year tax benefit of buying a home.

 

 

If you can itemize your mortgage interest, your tax return will likely increase. You can use the IRS withholding calculator to change the withholding of your income tax from your pay. Refer to the following link for the online withholding calculator on the irs.gov website.

 

Website: http://www.irs.gov/individuals/article/0,,id=96196,00.html

 

 

You may be able to itemize any points you pay at the closure of your loan when you file your taxes for the year in which you closed your loan.

 

 

Refinancing activity has been on a tear in the last few years due to low interest rates. When you refinance your home, you are essentially borrowing money or securing a new loan to pay the existing balance on your mortgage. Refinancing is typically done to take advantage of lower interest rates on the new or ‘refi’ loan or to tap into the existing equity of your home. Other reasons for refinancing include: combine first and second mortgage into one loan, to eliminate private mortgage insurance or to change lenders. You can also switch from an adjustable rate mortgage (ARM) to a fixed rate mortgage (FRM) when you refinance.

 

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