Points on refi

[Gretel]

I wonder how often a taxpayer actually pays for points and the amount is not rolled over into new loan hence also creating equity debt?

As I understand it points on refi can be amortized only (besides the issue of same lender) if actually paid for and the amount asked from taxpayer at closing table is at least the amount of the points.

The refi's done in my area most often don't require a payment from borrower or only a small payment, sometimes borrower gets money at closing.

This is something I surely have overlooked in previous years.

[Burke]

I believe the situation you are referring to --that the TP must have come up with cash out of pocket -- is only applicable to the full deduction of points on the original purchase. Otherwise, if he did not contribute any cash, or if he refi'd later, the points are amortizable over the life of the loan.

[Gretel]

Oops! Thanks, Burke, for clarifying this so fast. You are right, I actually looked this up last year, but had forgotten that the "payment" requirement does not apply to refi's and amortization.