Advice: Calculate Mortgage Tax Savings

The decision about when to buy a home is based on factors including interest rates, home prices and your financial situation. One important part of the financial calculation that is frequently forgotten, however, is the tax benefit of paying mortgage interest.

Mortgage interest payments (along with any points paid at closing) are tax deductible if you itemize your deductions on Schedule A of Form 1040.

The IRS defines mortgage interest in Publication 936 as "any interest you pay on a loan secured by your home (main home or second home). The loan may be a mortgage to buy your home, a second mortgage, a line of credit or a home equity loan."

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