Tax write-offs are the government’s way of rewarding taxpayers for doing something the government likes. When people borrow money to buy a house, there are many write-offs for the borrower to be aware of.

Here are few that are often forgotten:

Points: In order to be tax deductible, origination fees charged as points must be paid for the use of money. If the fee applies to the use of money (for example to lower the interest rate), then it can be written off.

Pre-Payment Penalties: Often, buyers need to pull out of a loan before they have completed paying for it, and they are charged pre-payment penalties.  Remember that these pre-payment penalties are always tax deductible.

Pro-Rated Real Estate Taxes: Buyers pay a pro-rated portion of the taxes for the year at closing. They can deduct their share.

Pro-Rated Mortgage Interest: Buyers pay a certain amount of mortgage interest for the month they close, and it depends on when in the month the sale closes.  The final closing statement shows how much they are due, and they can write that off.

Home Construction Loan Interest: As long as the construction period doesn’t last more than two years before they make the new place their principal residence, they can write off the interest for the construction loan.

If you as a buyer pay attention to these write-offs, you can get some serious savings on your taxes.

Freddie Mac recently reviewed the loan choice of refinancing borrowers. Borrowers chose fixed rate loans 99% in the second quarter, up from 98% in the first quarter, even though they had formerly had ARM loans. Although they predominantly chose 30 year loans, there was an increase in refinancers choosing 15 year fixed rate loans, up 2% among original ARM borrowers and up 4% among original fixed rate borrowers.

These choices toward fixed rate borrowing and shorter mortgages should come as no surprise, since in April mortgage rates reached new lows, with very small additional interest required to shorten the mortgage duration from 30 to 15 years.

Shortening your loan duration has several benefits that compensate for the higher monthly payment. You build equity faster and reduce the total interest paid over the life of the loan, ensuring that the loan is largely paid off by retirement time.

The Obama administration is putting pressure on the financial industry to speed up loan modification. Senate Majority Whip Dick Durbin (D-Ill.) has said he will consider proposing new legislation to impel faster loan modification if the industry does not reach  500,000 loan modifications by November, a goal which the administration set last week for the financial industry.

One possible proposal would be to allow bankruptcy judges to modify primary home mortgages themselves. This was in a bill that failed to pass the Senate earlier this year, but it might find more support if the modification rate remains sluggish.

Another proposal would allow for reductions of principal as part of the modification, in an effort to ensure that the homeowner would not redefault later.

Durbin is also considering legislation that would require mandatory arbitration between borrowers and lenders prior to foreclosure. Another element in the legislation would allow homeowners to stay in their homes by paying fair market rent during the process.

The public will need to monitor the success of these efforts in the news.

Banks have become quite slow in processing of refinance applications. Closing on an approved refinancing has gone up to 60-90 days from the former 30 days. This is due both to the reduction in processing staff that banks have instituted, and the increased documentation required of the borrower. Sometimes there is delay due to the more stringent appraisal evaluations. For many loans brokers are not longer allowed to choose the appraiser, in order to prevent the occurrence of appraisals biased in favor of the borrower.

The effect of this delay is that sometimes the rate lock-in expires, and the offered rate may be higher than that available at the start of the application process, making the loan terms less desirable. To compensate for this, some large banks such as Chase have increased the duration of their rate lock from 60 to 90 days.

Homeowners should keep this in mind if they are considering refinancing in an effort to capture a lower mortgage rate and monthly payment. Be sure to act early when the rates are low, and inquire as to the typical time required to process the loan, as well as the duration of the rate lock.