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I respectfully disagree.

If you paid points in 2002 to reduce the intereest rate on an existing mortgage and the existing loan will continue for the remainder of the original term (just at a lower interest rate) then you fail test 9 -- the points are clearly shown on the settlement statement. There is no way that the 2002 points could have been predicted in 2000.

If you paid points in 2002 and a new loan was issued at a lower rate then you fail test 7 -- the loan wasn't used to purchase or substantially improve your home. You already own the home.

If I have interpreted your situation incorrectly, please advise.


Ira, your first paragraph is the correct situation, except I figured I passed test 9. I interpreted that test to be searching for whether or not the fee was really points, i.e. origination fee, etc., or if it was some other nondeductible fee, i.e.appraisal or notary fees. And in my case there was no "settlement statement", but there was a modification agreement which broke out all the different fees, and what I'm calling points were listed as an origination fee. So I figured I passed test 9.
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