Q: We moved this year, and used the same agent for both the sale of our old home and the purchase of our new home. We had some problems with the builder along the way, and really feel that our agent went the extra mile to make sure we got everything we had been promised, even long after the closing. I know she got paid a commission on both sales, and we have expressed our appreciation in person, but we just wondered if it would be appropriate to say "thank you" in a more tangible way. Any suggestions?

A: When a real estate salesperson agrees to help you sell or buy a home, you have a right to expect honest and hard-working professional service from that person at every stage of the sales process, and beyond. It sounds to me like you got that, and perhaps a little more.

My advice is to document your experience in the form of a written testimonial letter, and present it to the agent along with a color photo of your family in front of your new home. This letter will serve both as a lasting reminder of your appreciation and a powerful marketing piece as well.

It would be especially thoughtful if you would include in your letter permission to share its contents with others in any form. That allows your agent to include it in his or her marketing book, showing prospective sellers a track record of successful transactions.

By the way, a copy of your letter mailed to your agent's broker would be appreciated as well. Sometimes agents are reluctant to blow their own horn, but feel more comfortable having someone else do it. Trust me, the broker will make sure that your letter is circulated among all the agents of that office.

This tangible form of expressing your appreciation will be remembered long after a box of chocolates has disappeared or a bouquet of flowers has faded.

Q: On my settlement statement, I was charged "per diem" interest for every day between the day of closing and the last day of the month. There were 31 days that month. Yet my monthly principal and interest payment as shown on my loan documents does not equal 31 times the daily amount. Also, if interest is charged every day, how can the monthly payments be the same in months that have a different number of days?

A: Home mortgage loans are typically calculated using a starting balance, an annual interest rate, and a term expressed in years or payment periods. Then the monthly payments are calculated to be payments in equal installments, regardless of the number of days in any particular month.

For example, the payment that you send in dated the first of January contains two components.

First, there is the interest charge for the use of the money during the previous month. It is calculated by taking the balance remaining after applying the prior month's principal payment, multiplying that sum by the interest rate, then dividing by twelve to figure the monthly interest charge. That interest fee is deducted from the payment you have just sent in.

The remainder is applied against the principal balance owed on your loan, thus making principal the second component of your payment.

This same calculation is performed every month until the loan is paid in full. In reality, your home mortgage loan is not a 30 year loan, nor is it a 365 day loan. Instead, it is a 360 month loan.

Q: Since only the interest portion of my payment is tax deductible, would it make sense for me to pre-pay some of the interest to my lender and take a larger tax deduction?

A: The IRS says that home loan interest expense can only be deducted as it is paid after it becomes due. You can not pay current interest in advance.

One possible exception is your January monthly payment, which is typically due on January first of each year. The IRS routinely allows taxpayers to deduct the interest for their January mortgage payment in the prior year if the check is dated in December and the check is postmarked before year-end.

Q: But what about discount points? Didn't you say that discount points are considered prepaid interest, and that you could take an immediate deduction for them? Why is that different?

A: The IRS has made a special exception for loan discount points which are "normal and reasonable" for the area and are expressed on the settlement statement as a percentage of the loan and are not netted from loan proceeds. These points must truly be interest and not an origination fee or fee for services.

If all of these conditions are met, and this loan is for the acquisition or improvement of a taxpayer's principal residence only, then the points are deductible by the taxpayer in the year they are paid. In another twist, the IRS says these qualifying points are still deductible by the taxpayer, even if the seller pays those points.

In the absence of these particular circumstances, they might be deductible, but would likely have to be amortized over the term of the loan, making the deduction much less attractive.