Second Mortgages

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Second Mortgages can have Great Tax Advantages

You'd be surprised at the great tax advantages you can get with a second mortgage. The interest you pay is usually tax deductible, so it's a much better route to extra money than using your credit card. Not only can you take advantage of today's low interest rates, but you'll save money by the interest being tax deductible.

How much you save depends on your tax bracket

Second mortgages, like first mortgages, are tax deductible so depending on your tax bracket, you could be saving quite a bit of money every month. The more money you make the more money you save at the end of the year come tax season. For this very reason people scramble to buy homes. The cost of home ownership is much less than you think due to the great tax relief you get. Second mortgages are just another perk to owning a home.

Points and origination fees

Points and origination fees on your second mortgage can also be tax deductible. These are fees your lender charges for doing the loan for you in the first place. Many people have the misconception that only the points and origination fees on your first mortgage is tax deductible but this is defiantly not the case.

How do I take advantage of the tax benefits on second mortgages?

You can take advantage of the tax benefits on second mortgages much like you would for your first mortgage. When filing your taxes, you will need to fill out Schedule A which is a form used to itemize your deductions. This form allows you to claim every penny you paid in tax over the course of the year as a tax deduction. Don't forget to include the tax on your first mortgage, points, origination fees and your real estate taxes as well.