0% financing has induced car buyers into taking the plunge because it doesn't cost anything to use someone else’s money. While mortgage rates are not at zero, they’re close enough that many buyers are applying similar logic.
Qualified mortgage interest is deductible on taxpayers' returns subject to the maximum acquisition debt of one million dollars. For the fortunate homeowners who have paid off their mortgage, their acquisition debt was reduced to zero and only the interest on a maximum home equity debt of $100,000 is deductible.
If you have to pay interest, deductible interest is preferable because it reduces your actual cost.
Consider the following example of a taxpayer with a $500,000 debt-free home. If they did an 80% cash-out refinance of $400,000, $100,000 would be considered home equity debt and the interest on that would be deductible on their income tax. The other $300,000 of debt is considered personal debt and the interest is not deductible.
However, because the rates are currently so low, the loss of deductibility of the interest doesn’t have as much impact as if the rates were higher. The key is to have a good purpose for the money that would offset the actual cost of the interest.
Paying off a higher rate debt such as credit cards, student loans, possibly, business debt could all have significantly higher interest rates. Refinancing a home and eliminating debts like these could be a big savings.
All lenders are not the same. Call for a recommendation of a trusted mortgage professional.
Author:Melissa Hardman Phone: 319-269-0304 Dated: January 15th 2015 Views: 569 About Melissa: ...
My name is Carl Ericson and I am a REALTOR with Oakridge Realtors in Cedar Falls, Iowa. I am in my eleventh year as a REALTOR. I work in Cedar Falls, Waterloo, and surrounding communities including Waverly, Hudson, Dike, Denver, and Evansdale.
I specialize in residential sales, investment properties, and new construction. Through hard work, experience and knowledge I become my clients real estate consultant. I helps my clients make sound real estate decisions and consult with my clients when they are contemplating a future real estate move.
I graduated from the University of Northern Iowa with a B.A. in Management: Business Administration and a Real Estate minor. I was involved with Rho Epsilon real estate club while I attended the University of Northern Iowa.
I have called the Cedar Valley home since 1987. I grew up in the area and believe that the Cedar Valley is truly a great place to live. I believe the Cedar Valley offers many features for people to enjoy including: arts and entertainments, sports, recreation, shopping, quality jobs, a great atmosphere, and much more.
If you are thinking about a real estate move, please contact me for a personal consultation.
Carl Ericson | Realtor®
Licensed in Iowa | #S43269000
Oakridge Realtors | 3313 Terrace Drive, Cedar Falls, Ia 50613