As well as monthly savings, tax deductions can also serve as benefits to a refinance

Some of the closing costs that are associated with a refinance are tax deductible. Some can be deducted all at once and others have to be stretched out over the course of the loan. This can help for income tax time and help lower the amount of tax money owed to the IRS or it can help by increasing the amount of money that is coming back to you from the IRS. Consult your tax advisor for specific information as to what is tax deductible and what is not.

To figure out the amount of your tax savings, compute your tax savings by using the IRS website or the W-4 form you can get from your employer. This allows you to figure how much extra monthly payments you could afford for a house.

Another tax benefit is to use a refinance to eliminate your credit card and other consumer debt. Interest charged on credit cards and all other consumer debt, including car loans, is not tax deductible. When you refinance and take equity out of your home to pay off these debts, you benefit because the interest on your mortgage is tax deductible.

 

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