Pay your January Mortgage Payment now

Increase your mortgage interest deduction in 2010 by paying your January mortgage before December 31. This will give you 13 payments in the calendar year than the usual 12 payments. The additional interest paid will be reported on Form 1098 which is then reported on line 10 of Schedule A.

Let's put it this way: in the 25% bracket for 2010 on a $1,000 interest payment, that saves you an immediate $250 on April 15, 2011. By doing that each year, you have created an interest-free loan of that $250 every year until the loan is paid off.

Next you need to do the following:

• Make it habit to make an early payment every year. Otherwise, 2011 will only have 11 mortgage payments.
• Make sure your mortgage lender calculates interest based on payment date and calculates interest up to that date. If you read your monthly mortgage statement and the interest applied to your principal is the same amount every month, that is a red flag.