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zguoqin
Level 1

Refinance Origination Fee deductible?

Hi,

 

I know this kind of question has been asked again and again. But because of terminologies, it is still not clear to me if origination fee is deductible. So I know points in refinance is deductible. But in my case, I do not pay points. Still in the Closing Disclosure, there is a dollar amount of origination fee. I am curious if this is deductible?

 

Thanks!

1 Best answer

Accepted Solutions
ColeenD3
Expert Alumni

Refinance Origination Fee deductible?

Yes. From Rocketlawyer:

 

You can deduct mortgage interest— such as home loan origination fees, maximum loan charges, and loan discounts— through the point system. One point equals 1% of your mortgage loan amount.

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3 Replies
ColeenD3
Expert Alumni

Refinance Origination Fee deductible?

They are the same thing as points.

 

Mortgage points paid

If you paid "points" when you refinanced your mortgage, you may be able to deduct them. Points are prepaid interest; you pay them upfront to get a lower interest rate during the period when you're repaying the loan. One point equals 1% of the loan amount, so if you paid 2 points on a $100,000 loan, for example, you would have paid $2,000. Points sometimes go by other names, including:

  • Loan origination fee
  • Maximum loan charge
  • Discount points
  • Loan discount

Points paid as part of a mortgage refinance usually must be deducted over the life of the loan. If you refinanced to a 15-year mortgage, for example, then you'd deduct a portion of the points each year for 15 years. This is different from points paid when you first bought the home; points on an original purchase can often be deducted in full in the year they're paid.

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zguoqin
Level 1

Refinance Origination Fee deductible?

Thanks for your prompt detailed answers, @ColeenD3 .

 

Just to clarify, I did not pay points to lower my interest rate (as advertised as no points by lender). So this origination fee still counted as "points"?  

ColeenD3
Expert Alumni

Refinance Origination Fee deductible?

Yes. From Rocketlawyer:

 

You can deduct mortgage interest— such as home loan origination fees, maximum loan charges, and loan discounts— through the point system. One point equals 1% of your mortgage loan amount.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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