Year: 2025

Mortgage Refinancing 101

Even before you’re ready to replace your current home loan with a new loan, you may be asking yourself, “Where do I start? Who should I talk to? What documents will I need?” In other words, the mortgage refinancing process may seem a bit overwhelming. The good news is there are steps to refinancing that are simple to follow. Take a look at the five steps below to begin your walk down the path to refinancing your home mortgage.

Set Your Re-fi Goals

Just like any other journey, the route to mortgage refinancing must have a destination. Some common refinancing goals include lowering your monthly payment, paying down the principal, withdrawing the equity in your home to pay off high-interest debt, and shortening the term of the loan. If you’re planning to move in five years or more, you may have other goals like re-investing the equity in smart improvements to increase your home’s resale value.

Know Your Credit Score

Having a great credit score usually translates into securing an excellent interest rate. That’s why knowing your credit score before you refinance is important. Does your credit score need some work? Take the time and effort to improve it. You may save yourself thousands of dollars over the term of your mortgage by earning a lower interest rate. A full credit report including your credit score is usually available free of charge from your bank and from many online resources.

Determine Your Home’s Equity

Before you refinance, call your lender to determine the payoff on your current mortgage. Then, have a trusted real estate agent show you a list of comparable properties (similar in size, age and updates in your neighborhood) that recently sold. Knowing the current market value of your home and subtracting what you owe on your current mortgage will help you determine the equity you have before you refinance.

Research Interest Rates

Knowing in advance the interest rates offered by various lenders will give you an advantage when you decide to refinance. Rates often differ by what seem like small amounts, but those fractions of percentage points add up over time. As well, depending on the type of loans you may qualify for, different home loan programs, such as VA, FHA, USDA and conventional offer different interest rates. Do your homework: research the best mortgage loans with the lowest rates that meet your needs.

Gather Your Money and Documents

Before applying to refinance your home mortgage, collect the necessary documents and data about your debt and assets, including income tax returns, W2s, bank statements, credit reports and personal identification. Also, be ready to pay closing costs by setting aside money in advance (about two to five percent of the appraised market value of your home).

With more than 20 years of experience helping individuals, small businesses and non-profit organizations with their finances, Donohoo Accounting Services is here to help you with your tax planning, tax filing and accounting needs. If you would like to set up a free consultation, contact us at 513-528-3982. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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6 Tips For Homeowners To Maximize Their Tax Deductions

Owning a home is one of the biggest investments most people make in their lifetime. Being aware of tax deductions and other credits available will give this big purchase every opportunity to pay you back a little come tax time. Here are six tips for homeowners to maximize your tax deduction:

Tip #1: Be Organized

Keep detailed records of your home-related expenses, financial documents and receipts. Most federal income tax deductions and credits require a paper trail, so the more organized your records are, the easier the process will be and the more likely it is that nothing will be missed or forgotten.

Tip #2: Deduct Your Mortgage Interest

If your mortgage is less than $750,000, you can deduct the interest you pay on the loan for no more than two residences. This could be your primary residence, summer home, or even a boat if it has plumbing or a bathroom. You can also include interest you may have paid when you closed on your home.

If you own more than two properties, be sure to use the deductions from the property that will give you the largest tax deduction — it may not necessarily be the property with the biggest mortgage payment.

Tip #3: Deduct Your Home Office Space

If you work from home in a dedicated space, you can deduct that space on your taxes. The current tax law allows you to deduct $5 for each square foot of office space, up to 300 square feet. This law has been taken advantage of by some, which is why it has earned a reputation of being an audit trigger. Make sure the space you deduct is exclusively used for your business or side hustle.

Tip #4: Deduct Your Property Taxes

With the Tax Cuts and Jobs Act of 2017, deducting your property taxes is still possible but not as flexible as it once was. You can now deduct up to $10,000, and that includes a combination of state and local tax deductions and state and local property tax deductions.

Tip #5: Consider Energy Efficient Upgrades

Tax incentives have changed for these types of upgrades, but some are worth looking into. Purchases for electric and water heating equipment, solar panels, rain barrels and drought tolerant landscaping may apply. Make sure to do your due diligence and triple check the specific requirements and deadlines for these green projects.

Tip #6: Age-In-Place Deductions

If you plan to live in your residence as you get older, you may be able to deduct expenditures for home improvement projects that will assist you as you age. Upgrades such as wheelchair ramps, lowering cabinets and electrical fixtures, and installing bathtub grab bars may qualify.

Donohoo Accounting Services is here to help you understand the IRS rules and determine the types of tax deductions you may be eligible for. With more than 20 years of experience in the business, we can help you reduce your tax burden by finding every deduction possible. If you would like to set up a free consultation, contact us at 513-528-3982. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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