Tax Deduction Benefits of Florida Refinancing

More than getting a fresh start on your home loan, refinancing mortgage loans can give you extra flexibility on your payment. One of the benefits of Florida refinancing is the tax deductibility feature of the amount that qualifies as home acquisition debt. People may not be aware of how their mortgages work; hence, they fail to take advantage of some factors that are just laying there in front of them. Florida mortgage companies can provide first time borrowers with the basic information about taking loans. Interests on Florida mortgage rates are subject to tax deductions. This remains true for Miami mortgage, Orlando mortgage and the rest of Florida and across the United States. During the first few years of paying for your mortgage, the interest rates are usually higher. The succeeding years will see your interest rates getting lower and lower. The higher the interest rates are, the higher the deductions.

Mortgage debts are categorized in two: home acquisition and home equity. The latter is the remaining amount after deducting the cost of the old loan. When you take out a new mortgage in the sum of $120,000 to pay for the old loan which costs $100,000, the $20,000 is considered your home equity debt. The $100,000 is classified as your home acquisition debt regardless of whether this is a new loan or a refinancing option. Paying off your old Florida mortgage with a new loan may lower your tax liability. Also, using the new loan to pay off credit card debts is even better in liberating yourself from too much financial responsibility. In doing so, the non-deductible credit card interest is replaced with tax deductible mortgage rates instead.

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