"A comfortable old age is the reward of a well-spent youth. Instead of its bringing sad and melancholy prospects of decay, it would give us hopes of eternal youth in a better world."Maurice Chevalier
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Mortgages - How Much Are You Really Borrowing?
How much are you paying back? When considering a mortgage do you consider all of the right questions, for example do you consider which bank is best because of their reputation or do you instead look solely at the interest rate tables, do you look at the ...
Using a Business Mortgage to Grow your Business
So you want to be a Player? The real movers and shakers of America are always looking to move up the ladder of success. They also have a particular penchant for desiring to display their success through their purchasing power. You may have noted that ...
Why "No Points" 30-Year Fixed Loans Usually Don't Make Sense
I hear it all the time, and you probably do too. On the radio, TV, in the newspaper or online - "Call now to get a 30-year fixed loan at x% with no points or fees!". I'd like to explain to you why this almost never makes sense. First, we need to make an ...
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As you begin your search for the perfect home, and you research your mortgage loan options, the tax consequences of a mortgage loan with mortgage interest doesn't ever cross the minds of most consumers. But as you decide which product you need, or think you need, the tax repercussions and benefits should play a role, even if it's a small one, in the final decision.
For many consumers, the first thought that's given to their tax return, and tax liability, comes from the mortgage lender. Quite often, mortgages are touted as being one of the best venues for reducing your tax liability at the end of the year. Yes, your mortgage interest payments will reduce your tax liability, but is that your ultimate goal? Is that why you're looking at mortgage packages? No. Your ultimate goal in choosing a mortgage is to pay for your home. Every situation in this case, and this case would apply to the average consumer shopping for a mortgage loan, is probably not going to get that much benefit from the tax deduction that comes from their mortgage interest payments. The average consumer should first look at their monthly payment and choose a mortgage based on affordability, not tax liability.
The smart consumer will not allow the flashy ads displayed by many mortgage lenders to influence their mortgage loan decision. The smart consumer will examine the interest level, the term of the mortgage loan, the affordability of the monthly payment, and base their decision upon their ability to pay in relation to the mortgage that achieves their primary purpose: the payout of the loan.
You and I rarely consider the impact of any financial decision on itemized deduction statement; however many of those decisions do affect itemized deductions. Our itemized deductions and major portion of our tax liability? No. Do they contribute to a reduction in tax liability? Yes. The relativity of the contribution when contrasted to the required time in examining the actual benefit we derive from the itemized deduction calculations warrants the point mute. It's just not worth the effort. If you happen to be in your mid-40s and your purchasing your first home, I would suggest that you consult a financial adviser prior to making a mortgage decision; however most individuals in their mid-40s would already realize the benefit of a financial adviser. A young couple purchasing their first home would truly benefit from the interest deduction, not to the extent however off more than $40-$50 of the bottom-line for their tax liability. As you age, and your way to earning power increases, the benefit of the itemized deduction decreases. Does the average person understand how tax is configured? No. The only person who can truly enlighten a consumer would be a tax professional, and many average individuals would spend more money in the determination of the benefit than they would reap.
The new guy on the mortgage loan law, known as the interest only mortgage loan will bring the greatest benefit to the consumer. The interest-only lawn in the amount of interest you can deduct on your tax return are one and the same, but does the benefit of the mortgage interest deduction outweigh the added expense of an additional five years on the mortgage loan?
What about the mortgage loan refinance? Any equity you remove from your home in the form of cash that can be used to pay down or pay all high interest credit card accounts will transfer a nondeductible expense to your deductible expenses. However you should remember the trade-off you now owe more against your home, and you have used your equity reserves. Was the deduction worth the trade? Many times the answer is no. For many consumers, paying off high-interest credit card debt only increases the probability of additional credit card charges. In other words, not only have use your equity, you've returned to high-interest debt.
Prior to a final decision of your mortgage along product, take a moment to review your tax situation. Each situation is unique. The lower your income, the greater the benefit, but rarely is the benefit worth the cost. Behold, the Tax Man, cometh.
About the author:
Tony Robinson is a Real Estate Investor, Webmaster and International Author. Visit http://www.ezy-mortgage.com/ for his tips on mortgages.
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 Should you refinance? - Fayetteville Observer
Janiece Brewer hasn’t been asked to crunch so many numbers since the housing boom of 2005. But instead of working with potential new homeowners, the inquiries at her mortgage loan company have been about refinancing as interest rates sink to record ...
Situations determine refinancing - Fayetteville Observer
Should you refinance? It depends on your situation. How much do you still owe? How long do you expect to stay in your home? Are lower payments a priority? Janiece Brewer, owner of Liberty Point Mortgage and vice president of the Mortgage Bankers ...
U.S. Banks Offer Mortgage Rates Below 5% as Fed Buys Securities - Bloomberg
Jan. 8 (Bloomberg) -- The largest U.S. banks are starting to offer fixed home loans below 5 percent after the government began buying mortgage securities to bolster the housing market. JPMorgan Chase & Co. is advertising 30-year mortgages as low as 4 ...
Waco banks seeing a boom in mortgage refinance applications - Waco Tribune-Herald
With mortgage rates hitting record lows, Mary Jo Teakell is seeing a growing backlog of refinance applications. “We’re quite busy right now,” said Teakell, senior vice president at Extraco Banks, commenting on the surge in people wanting to get ...
Don't miss the refinance window - HometownAnnapolis.com
CHICAGO - Lured by low mortgage rates, many homeowners have been rushing to refinance. Interest is gaining for good reason: Eligible borrowers can lock in rates that haven't been this attractive in decades. "With interest rates hovering around 5 ...
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