down payment. Speak to a financial advisor for help with your specific situation.
OTHER HOMEOWNER TAX BREAKS: REAKS:
The Mortgage Interest Deduction. This is one of the most beneficial tax breaks that home buyers can take advantage of, whether first-time or otherwise. The IRS allows you to deduct the interest you pay your lender from your taxable income. Home mortgage interest is one of the most significant deductions for itemizing. Lenders will report your mortgage interest on a 1098 form sent out annually. The Mortgage Interest Deduction (MID) is valid for mortgage debt up to $750,000 or mortgage debt up to $375,000 if you are married but filing separately. Home buyers can benefit significantly in the first years after buying, as the first repayments have the highest interest. Home buyers must file an itemized tax return to claim the MID benefit. Mortgage Points. Discount points (mortgage points) are fees paid directly to the lender at closing in exchange for a reduced interest rate. The discount points cost equals 1% of your mortgage ($1,000 for every $100,000). Discount points involve prepaid interest and can reduce your total mortgage payment. The interest rate on your mortgage typically lowers by 0.25% with each point you buy. If you elect to do this, the fee for the points is tax deductible for the year in which you paid them, assuming the loan you obtained is for your full-time, year-round home (as opposed to a second home or a vacation home). Mortgage Credit Certification. The Mortgage Credit Certification (MCC) is another program that helps thousands of first-time home buyers secure a tax break. This IRS-based program is aimed at helping lower-income groups afford their first home by subsidizing the loan. The MCC program is designed to help first-time home buyers offset a portion of their mortgage interest on a new mortgage to help them qualify for a loan. Because it’s a tax credit and not a tax deduction, mortgage
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