Mortgage rates have bounced up to the low 5%s (APR) and housing prices are high. But, it’s not as bad as it sounds. Since you deduct mortgage interest from your taxable income, your net cost is lower. In other words, if you pay $20,000 per year in mortgage interest, your taxable income is reduced by $20,000.00 which lowers your federal and state tax liabilities. When you are buying a home, you can adjust your payroll tax withholding by submitting a new W-4 form. If you lower your tax withholding you will bring home more pay which you can use toward your mortgage payments. Property taxes are also deductible. Bamboo Mortgage, Inc is a mortgage brokerage. We are not CPAs- so, consult your tax preparer for tax advice.
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