What do I need to know about year-end mortgage tax documents & forms?

Tax season comes with plenty of paperwork. If you’re a homeowner, your mortgage interest statement is one document you should keep handy.

Also known as IRS Form 1098, this year-end statement gives you a summary of the mortgage interest you paid during that tax year, as well as some other useful information about your loan.

The best part is, you could even qualify for the mortgage interest deduction, which could help you lower your taxable income.

Before you start filing, here’s what you need to know about Form 1098, what each box means and how to use your mortgage tax documents.

What is a mortgage interest statement (Form 1098)?

IRS Form 1098, also called the mortgage interest statement, is a tax document that lenders generally issue to borrowers who paid $600 or more in mortgage interest, including certain mortgage points, during that year. For reference, here’s a quick sample form.

Your lender sends you a copy and reports the information to the IRS.

What’s on a mortgage interest statement?

As a standardized form, Form 1098 looks the same no matter which lender you use. At the top of the form, you’ll see your lender’s name, address and taxpayer identification number (TIN). There are also your name, address and TIN, which is typically your Social Security number.

Underneath that, you’ll see numbered boxes with additional details about your mortgage, including interest payments, the outstanding principal and other reportable amounts. Let’s take a closer look at what each one means.

What do the boxes on a mortgage interest statement mean?

Here’s a quick breakdown of what you’ll find on your mortgage interest statement.

Box 1: Mortgage interest received from payer(s)/borrower(s)

The first box shows the amount of mortgage interest your lender received from you during the calendar year. It may also include interest paid on a qualifying Home Equity Loan (HELOAN) or Home Equity Line of Credit (HELOC)¹.

Box 2: Outstanding mortgage principal

The second box reports the outstanding principal balance of your mortgage as of January 1 of the reporting year. If your mortgage originated or was acquired by the lender during that year, the amount generally reflects the principal balance on the origination or acquisition date instead.

Keep in mind that this isn’t necessarily your current mortgage balance or the amount you owed at the end of the year.

Box 3: Mortgage origination date

Next, you’ll see the date your original mortgage was established. For most homeowners, this is the day you closed on the property. If your mortgage was transferred to another lender, the original mortgage origination date is still listed there.

Box 4: Refund of overpaid interest

If your lender refunded or credited mortgage interest you overpaid in a previous year, that amount may appear in Box 4.

Depending on whether you previously deducted the interest, the refund could affect your current tax return. Talk to a tax professional for specific guidance on how to report it.

Box 5: Mortgage insurance premiums

If you paid qualifying mortgage insurance premiums during the year, the reported amount may be listed in Box 5. This can include private mortgage insurance (PMI) premiums.

However, just because you have mortgage insurance premiums listed on Form 1098 doesn’t automatically make them deductible. Check the applicable tax-year rules, or when in doubt, talk to a tax professional before claiming a deduction.

Box 6: Points paid on purchase of principal residence

Did you pay mortgage points when purchasing your primary residence? If you did, you should see them in Box 6.

A mortgage point is an upfront fee that may allow you to lower your mortgage interest rate down the line. Some mortgage points may qualify for a tax deduction, but the timing and amount depend on your circumstances and IRS rules.

Box 7: Address confirmation

Box 7 helps you identify the property securing your mortgage. If that property’s address is the same as your mailing address, your lender may check this box instead of entering the address again in Box 8. But if the addresses differ (or the lender chooses not to check Box 7), the property information is generally provided in Box 8.

Box 8: Address or description of property securing mortgage

If Box 7 isn’t checked, Box 8 usually lists the address or description of the property securing your mortgage.

Box 9: Number of properties securing the mortgage

If there is more than one property being used to secure the mortgage, Box 9 shows the total number of properties.

For example, if two properties serve as collateral for a single mortgage, you may see a “2” in this box. If only one property secures the loan, the box will probably be left blank.

Box 10: Other

This is for miscellaneous information that the lender would like to report, such as real estate taxes or insurance paid from escrow. If you see this empty, don’t worry. Not every lender chooses to use this box.

Box 11: Mortgage acquisition date

If your mortgage was acquired by another lender during the reporting year, Box 11 shows the date the new lender acquired it. This is different from the mortgage origination date listed in Box 3.

What is the mortgage interest tax deduction?

The mortgage interest deduction is a federal tax benefit that allows eligible homeowners to deduct qualifying mortgage interest from their taxable income.

Most of the time, the deduction applies to interest paid on loans used to buy, build or substantially improve a qualified home (subject to IRS limitations). This may include a primary residence or an eligible secondary home.

However, there’s one important note to keep in mind: You must itemize deductions on your federal tax return to claim the mortgage interest deduction.

In other words, you’ll need to compare your eligible itemized deductions with the standard deduction to determine which option is best for you. Your tax professional can help you determine what makes the most financial sense.

When can I expect my mortgage interest statement?

Each company has its own mail delivery method, but these forms must be sent out by January 31. Some companies may offer digital copies of your statement.

If your loan servicing has been retained by Rate and you have made payments online, you can access your form at our servicing portal.

The bottom line? Before filing your taxes, always review your Form 1098 to make sure your personal information and reported mortgage details are accurate. If something looks off, contact your mortgage servicer for help.

Disclaimers:

Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions.

Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.

Rate does not provide tax advice. The consumer should always consult a tax advisor for information regarding the deductibility of interest and other charges in their particular situation.

1. Rate home equity line of credit (HELOC) is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. This product is currently not offered in the states of New York, Kentucky, West Virginia, Delaware, Maryland and Maine. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Rate for more information and to discuss your individual circumstances. Restrictions Apply.