interest deduction and include that in your annual financial planning. Then, make a point of checking Internal Revenue Service (IRS) Form 1098 that you will receive from your lender at the end of each year. This form shows the amount of mortgage interest you’ve paid. Some of the nondeductible items include home repairs, general closing costs, homeowners’ association dues, as well as property insurance premiums. Getting a loan to purchase a home can be a tricky business, and there are terms one might find hard to understand, e.g., the term “mortgage points,” which refers to the interest that’s been prepaid. It’s possible to lower your mortgage loan’s interest rate by “buying points.” Mortgage points, or discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” and will decrease your monthly mortgage payments. One point costs 1% of your mortgage amount (or $1,000 for every $100,000). Essentially, you pay some interest upfront in exchange for a lower interest rate over the life of your loan. In general, the longer you plan to own the home, the more points help you save on interest over the life of the loan. The interest you’ll save by buying the points depends on the number of points you buy. But you’ll owe more at closing. For instance, if your mortgage is $200,000 and you buy two points, you will owe $4,000 more at closing. However, if you’re going to buy a home and your down payment is less than 20%, you’re going to need private mortgage insurance (PMI). That will add to your monthly payment amount. Further related to taxes and property ownership is that once you own a home, you’re a property owner, with the attendant obligation to pay real estate taxes. The usual method of paying
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