<p>Anyone able to direct me to tables or charts that would let me estimate any tax advantage on home interest. After many yrs the flexible interest rate is up. I think it is time to refinace to a lower fixed rate. H agrees but thinks that taking out money to fix up home or pay child’s tuition would help decrease taxes. I disagree since we do not need to borrow. I see no reason to borrow extra at 6% if I do not need the money. Would tax deduction on interest outweigh interest paid? I read somewhere that person would be spening $1 to save 0.03.<br>
Thanks
Our wonderful long time accountant passed.</p>
<p>Any tax program would work. Online programs are free, even the IRS’s.</p>
<p>Paying LESS in interest is always better than a tax deduction, unless other extenuating circumstances, which most people have. </p>
<p>Besure to include the closing costs of the new loan to interest. Even though the closing costs are not deductible, this money must be accounted as part of the loan’s amortization.</p>
<p>If you refinanced recently, then you may look back and see that the interest you have paid is literally lost and wasted money. </p>
<p>Refinancing now when you able, is sometimes better than refinancing later, when you can’t. Then sometimes it isn’t.</p>
<p>No real answers. The problem you pose is a “hedging” question. (poker, and insurance) Sometimes you win and sometimes you lose. Foretelling the future is always difficult, even for the oracles and prophets.</p>
<p>Thanks,
I can google and find info but not programs. Can you point me to one? We have never refinanced.</p>
<p>lamom, I went through this a few weeks ago just out of curiousity, and couldn’t find any programs, then realized the only way to do it was to throw some forumlas into a spreadsheet and calculate it myself. I decided the end results were too confusing and gave up, because there were too many variables in the scenario.</p>
<p>lamom:</p>
<p>take your marginal tax rate and multiply it by the increased interest, and that is your tax ‘savings’.</p>
<p>For example, borrowing $100k at 6% interest for 30 years yields an payment of $280/mo. Assume it is nearly all interest in the early years. If you marginal tax rate is 25%, then 25% x $280 = $70 in reduced taxes/mo.</p>