Even though many people think that refinancing their home is an expensive proposition, the truth is that refinancing can saves homeowners hundreds of dollars on a monthly basis. In addition to saving money each month on your house payment, there are also tax benefits associated with refinancing your home loan.
By making yourself aware of the potential tax benefits of refinancing and planning carefully, you can help keep a greater percentage of the funds you save in your own pocket.
Itemize Your Deductions
When you first finance or refinance your home, most of the money you pay each month goes toward the interest on your loan rather than toward reducing the principal balance. For many homeowners, taking advantage of itemized deductions allows them to save taxes because they are able to write off the interest paid in on their home loan.
Spouses who file joint income tax returns are able to deduct up to $1 million of interest each year. If you had a mortgage for $300,000 and you refinance your home with a $350,000 mortgage, you can enjoy increased tax deduction benefits associated with the additional interest you are paying.
Under Internal...
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