Mortgage Interest. For most homeowners, the bulk of your mortgage payment is going towards interest – and that’s a big tax break for you! The mortgage interest on your primary residence is fully tax deductible, unless, of course your loan is more than $1 million.

You can also deduct late payment charges as home mortgage interest as long as the payment was not late due to a specific service received in connection with your home loan. Also, if you pay off your mortgage early and incur a prepayment penalty, you can deduct that penalty as home mortgage interest (subject to the same requirements for late payments).

Property Taxes. Your property taxes – the annual taxes based on the assessed value of your property – can also be deducted. Your mortgage interest statement may list the amount of real estate taxes you paid if your taxes and homeowners’ insurance went into an escrow account when you closed on your mortgage. You can also review your cancelled checks to determine your total real estate tax deduction.

Loan Points. Any points you paid to get a better rate on a home loan, are tax deductible in the year you made the purchase as long as:

• The loan is secured by your primary residence and it was used to buy, improve or build the home.
• Paying points is an established business practice in your area;
• The points are computed as a percentage of the loan principal;
• The points are clearly defined on the buyer’s settlement statement; and
• You put cash into your home purchase in an amount at least equal to the points you were charged.  

Loan Points on a Refi. The points you paid on a refinanced loan may also be tax deductible, however in most cases, the points must be deducted over the life of the new loan. So if you paid $2,000 in points to refinance a 30-year mortgage, you can deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year on the new loan.

Interest on a Home Equity Loan. The interest on a home equity loan may be tax deductible up to $100,000. However, if your home equity loan, when combined with your first mortgage amount, increases the debt on your home to an amount more than the property’s actual value, you’ll face deductibility limits. In these cases, the IRS allows you to deduct the smaller of interest on a $100,000 loan or your home’s value less the amount of your existing mortgage.

Related articles by Zemanta

• Mortgage Interest Deduction Myth (bargaineering.com)
• Before Buying a Home (imbrandon.com)

 

News you can use:  February Newsletter is here and it is, as always, full of useful tips and information that you can use. 

Topics included in this month’s Newsletter: 

• How to repair your home without damaging your wallet
• Exterior remodeling proves best bang for your buck
• Homebuyer tax credit boosts economy
• Understanding the buyers mindset
• View current mortgage rates 
• January round up: mortgage rate trends

If you have any ideas or tips on topics for next month please share it with me; I would be glad to research it and publish it.

Realty World Corral Hollow agents have always been actively involved in helping the community throughout the years and I am proud to be one of them.  We care about our clients and we care about the community.

In these troubling times, Corral Hollow agents are available for you to educate you and to give you directions as to what would be the best option for your individual situation. A confidential, personal consultation does not cost any money and if you get nothing else out of it, just knowing that there is someone you can trust and talk to, will make you feel better and it will be well worth it.

Being agents at Realty World Corral Hollow, our ongoing education allows us to stay informed of the newest laws, rules and regulations that would affect your situation as a homeowner.

For most of us, our biggest investment in our lives is our home.  And it is worth every effort to fight for it.  As your realtor, I would stand and fight with you, until we can reach a reasonable solution.  Even if you are one day away from foreclosure, there is still time to act. 

I urge you to pick up the phone and call me or any Corral Hollow agent to find out about your options. 

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Bi-Weekly Mortgage

Did You Know? Making one extra mortgage payment a year will knock years off your mortgage and save you thousands of dollars. Click here to learn more.

If you search for “bi-weekly mortgage” with an Internet search engine, you will be overwhelmed by the number of companies offering “Bi-weekly Mortgage Reduction Services” or “Bi-weekly Savings Programs.” Beware, you are entering dangerous waters.

Beware of Bi-Weekly Mortgage Reduction Services and Savings Programs

These “Reduction Services” and “Savings Programs” are charging you fees to “make a bi-weekly mortgage payment” for you. The enticement is that they will save you an impressive amount of money on your mortgage and reduce the number of years you pay on your mortgage.

The enticement is that they will make bi-weekly mortgage payments for you.

The real story is that they are not actually making bi-weekly payments on your mortgage. They are making bi-weekly deductions from your bank account. These funds are placed into an account from which your monthly mortgage payment is made (which only takes 24 deductions – but during the course of a year 26 deductions will be made from your account). With the extra 2 deductions, the “Service” makes an additional mortgage payment. In other words rather than making 12 mortgage payments, 13 payments are made.

The enticement is that they are providing a special service to you that would either not be possible for you to get on your own or that you won’t have the time or discipline to make it happen.

The real story is that you can easily make an additional mortgage payment each year. An easy way to do this is to have your mortgage payment automatically deducted from your account each month with an additional 1/12 payment to be applied to the principal amount. At the end of 12 months, you will have made an additional payment. And you won’t have to pay any fees to a “Service”.

Remember: when you have questions, you can always turn to a local Realtor® and he or she will be glad to assist you. 

In today’s increasingly automated society, it should come as no surprise that when you apply for a mortgage, your ability to pay can be reduced to a single number. All the years you’ve been paying your mortgage, car payments, and credit card bills can be analyzed, sliced, diced, spindled and mutilated into a single indicator of whether you’re likely to meet your future obligations.

All three of the major credit reporting agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a score. The best known is called the FICO score, based on a model developed by Fair Isaac and Company (hence the name) and used by Experian. Equifax’s model is called BEACON, while TransUnion uses EMPIRICA. While eac

h of the models considers a range of data available in your credit report, the primary factors are:

Each of these, and other items, are assigned a value and a weight. The results are added up and distilled into a single number. FICO scores range from 300 to 850, with higher being better. Typical home buyers likely find their scores falling between 600 and 850.

FICO scores are used for more than just determining whether or not you qualify for a mortgage. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.  That is why lenders won’t quote you a set interest rate for a home loan before they were able to check your credit scores.

What can you do about your FICO score? Unfortunately, not much. Since the score is based on a lifetime of credit history, it is difficult to make a significant change in the number with quick fixes. The most important thing is to know your FICO score and to ensure that your credit history is correct. Conveniently, Fair Isaac has created a web site (http://www.myfico.com/) that let’s you do just that. For a reasonable fee, you can quickly get your FICO score from all three reporting agencies, along with your credit report. Also available is some helpful information and tools that help you analyze what actions might have the greatest impact on your FICO score. Each of the credit services offers similar services on their web sites: http://www.equifax.com/, www.experian.com, and www.transunion.com.

Armed with this information, you will be a more informed consumer and better positioned to obtain the most favorable mortgage available to you.

Should you be in need of assistance to correct your credit issues, the best advise I can give you is to turn to any reputable loan officer, or consultant who is willing to hold your hand and help you every step of the way.  If you do not know where to turn, please contact me and I will supply you with a list of names and contact information.

Should you feel you are able to make credit score corrections on your own, attached here is a complete Credit Repair Kit that could be a great help to you.  

I would like add one more thing, if I may:  If you are thinking of purchasing a home and need to apply for a home loan, please stay away from spending on big puchases, like buying a car, furniture or pay for a cruise because this will influense your buying power in a negative way.

 

The Cost Of Your Mortgage Loan

The same care and consideration you give to finding the right house should be applied to your search for the right mortgage lender. For most home-buyers a major determining factor in selecting a lender is the cost of the mortgage loan.

But how do you determine the cost of a mortgage loan?

Shopping for a Mortgage Loan

While most buyers concentrate on interest rates, it is best to look at all the costs associated with a mortgage loan. Mortgage loans include the quoted interest rate, points and closing costs.

But how do you determine the cost of a mortgage loan?

Shopping for a Mortgage Loan

While most buyers concentrate on interest rates, it is best to look at all the costs associated with a mortgage loan. Mortgage loans include the quoted interest rate, points and closing costs.

More than Just Interest

A number of fees are associated with the mortgage loan, including:

• Appraisal - A carefully documented opinion of value by a licensed, professional appraiser.
• Credit Report – A detailed report of your credit, employment and residence history prepared by a credit bureau.
• Principal – The amount owed on a mortgage which does not include interest or other fees.
• Document Fees, Loan Fees and Processing Fees – Miscellaneous fees charged by the lender.
• Discount Points – Points paid in addition to the loan origination fee to get a lower interest rate. (1 point = 1 percent of loan amount)
• Origination Points – the total number of points paid by the borrower at closing. (1 point = 1 percent of loan amount)

Interest Rate – A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning fund

Using the Annual Percentage Rate (APR) to Compare Mortgage Loans

The APR was designed to help borrowers understand the relative costs of a mortgage loan. The APR takes into account the various fees associated with the loan, which is why it is often higher than the interest rate. Understand that not all lenders calculate a loan’s APR in the same way. That is why this should be only one of the factors used in selecting the best mortgage for you.

Locking-in Interest Rates

Another factor to consider when selecting a lender is whether the lender will lock-in the mortgage’s interest rate and points. Click here to learn more about lock-in options.

Read here about “Mortgage Saving Tips”

Read the full story here: http://bit.ly/bxVq9

How to Reduce Your Mortgage

One Additional Mortgage Payment a Year

There’s a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars. The trick is to make one extra mortgage payment a year and apply that payment toward your loan’s principal.

This is the method being used by “Bi-Weekly Mortgage Reduction Services” and “Bi-Weekly Mortgage Savings Programs“. Only, when you do it yourself, you don’t pay a third party unnecessary set-up costs and fees!

Example: $100,000 loan, 30-year mortgage, 6.5% fixed interest rate

 One-time Payment

It may not be possible for you to increase your monthly mortgage payment. Keep in mind that most mortgages will permit you to make additional payments to your principal at anytime. Perhaps, five-years after moving into your home you receive a larger than expected tax return, or an inheritance or a non-taxable cash gift.  You could apply this money toward your loan’s principal, resulting in significant savings and a shorter loan period.

Example:

With a $100,000, 30-year, 6.5% fixed interest rate mortgage loan, the borrower will pay a total of $227,542.98 to pay back the loan in 30 years. That equals $127,542.98 in interest payments.

If the same borrower makes a one-time $5,000 payment the first day of year 6, he/she will pay a total of $204,710.75 and pay off the loan in 27 years (324 months). That’s a savings of $22,832.23 in interest.