Question:

What to know about mortgage interest tax deduction, say, in 2006?

Answer:

Mortgage interest tax deduction in 2006, or in any other year, is just a write off of your yearly income that you don't have to pay tax on. That is, it is not that the money you spent on mortgage interest will be paid back to you. It is just that your taxable income will be reduced by certain mortgage related costs, as interest and points, before tax bracket applies.

Many people really think it is worth getting a house, any house, for you get tax benefits. If one follows that logic they should be seeking a higher mortgage interest rate to maximize tax deductions and this is so not the case.

Mortgage interest tax deduction makes sense when borrowing money against equity.

Tapping home equity for business or medical purposes, or investment makes sense, especially when homes are appreciating. A home equity loan or line of credit, depending on current rates, is a quick and cheap way to borrow money, compared to high rate credit card and personal debt.

While it also makes sense to pay off your mortgage on accelerated terms, due to the home mortgage interest tax deductibility the cost of home equity loan money goes down and this money can be invested into developing your business, or higher return investments, or even into other real estate.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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