Deductible mortgage points? Points that you pay in cash on purchases are not treated anything like when they are paid on refinancing transactions. If you are working with a purchase transaction you will be able to deduct the points that you have paid in cash, but only in the year that you received the loan not in any years following. On the other hand, when you are refinancing you will still be able to deduct your points but instead of deducting them in the first year you will have to spread the deduction out over the life of your loan. If you come into some money and you decide to put it all towards your mortgage and you end up paying off the mortgage early you will then be able to deduct the rest in this last year without any problems. If your points happen to be financed then they will be included in the actual loan itself and they will not differ in the way that they are treated on both the loan and the refinancing. These are never deductible as points. Your interest deductions are bound to be higher this way since your loan amount will be higher. It is important to note though, that these deductions will be spread out over the term of this loan. And even if you pay off your loan early you will not get to deduct anything at the end like you would with the other option.