5 wise money moves before the Fed starts raising interest rates to fight inflation


One potentially costly tax issue that many people don’t consider when refinancing their mortgage

One possible tax impact people often don’t consider is that a large drop in your interest rate could also result in a large drop in tax-deductible interest, says Denny Ceizyk, senior staff writer at LendingTree: “This could leave you with a higher federal tax bill come tax season,” says Ceizyk. You may be able to deduct points from your taxes (you buy points in order to get a lower interest rate), though these are typically deducted over the duration of the loan, so you’d deduct a portion of them each year. The mortgage interest deduction — a tax incentive for homeowners — used to allow homeowners who itemize to deduct mortgage interest paid on $1 million worth of principal per couple, but now it is on just $750,000.

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