Current Mortgage Rates

Thursday, August 21, 2008



Here's a quick rule of thumb. Compare your mortgage interest (plus any points paid on the purchase of your residence) with your standard deduction. If you have refinanced your mortgage, points on the refinancing are deducted gradually over the life of the loan - 1/30th a year on a 30-year mortgage, for example. Don't forget to add each year's share to your deductions. If the interest you paid on your mortgage is larger than your standard tax deduction, you definitely benefit by itemizing -- and all the rest of your deductible expenses (including real estate taxes and state and local income taxes) are frosting on the cake.

Here are tips to help you make the most of your mortgage interest deduction.
  • Deduction of points - If you have recently purchased your home, any points you paid to lower your interest rate can also be deducted. There are special rules when deducting your discount points; you may be able to deduct all of your points the first year you file. If you are refinancing your mortgage and pay points, you may have to spread the points out over the life of your loan. There are exceptions, for example if you used equity for home repairs you can deduct the points all at once.
  • Deduction of a prepayment penalty - You can usually deduct any prepayment penalty you incur if you pay off your loan early, unless you received a specific service for the prepayment penalty.
  • Exclusion of capital gains on the profitable sale of a home - When you sell a home and realize a capital gain, you can exclude profit of up to $250,000 if filing as single or married filing separately and $500,000 if married filing jointly as long as you have lived in the home for two of the past five years.
  • Tax credits for energy-efficiency improvements - Starting in the 2006 tax year, you may earn a lifetime tax credit of up to $500 when you purchase qualified energy-saving equipment for your home such as exterior windows and doors; heat pumps; central air conditioner; insulation; etc.




More Mortgage Resources

What is Mortgage Tax deduction?
Mortgage's Tax Implications
What are the tax benefits associated with different types of Loans?
Should I Borrow For the Tax Deduction?

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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed6.62%
30-yr. fixed jumbo7.25%
15-yr. fixed6.00%
15-yr. fixed jumbo6.88%
7/1 ARM6.25%
5/1 ARM6.00%
3/1 ARM5.75%
1-yr. ARM5.62%
1-yr. LIBOR ARM5.50%
10/1 ARM8.00%
*Mortgage Rates Updated: 08/20/2008