Combining existing home equity line with interest only mortgage...interest still tax deductible?
829116
The following is copied from an IRS FAQ.  I believe it is sufficiently close to you question to serve as an answer.\n\nIs interest on a home equity line of credit deductible as a second mortgage?\n\nYou may deduct home equity debt interest, as an itemized deduction, if you are legally liable to pay the interest, pay the interest in the tax year, secure the debt with your home, and do not exceed certain limitations. For more information, refer to Publication 936, Home Mortgage Interest Deduction; and Tax Topic 505, Interest Expense.
1071060
I'm not sure about your question--which is better?\n\nWhen you have a mortgage, early on the bulk of the payments are interest, and you can deduct that amount on  your income tax.  A good deal.
466623
1) Do not contact 'motgage guru' since on a purchase there is NO RIGHT of RECESSION; period. You only have a 3 day recession on a refinance of your primary residence. Adding a HELOC to a primary residence is a refinance transaction.\n\n2) It sounds like your getting the shaft... Either cancel if possible or start yelling! Once you sign those docs they are set in stone.\n\n3) On a HELOC the rate is based on the prime rate. When you received your GFE the prime rate may have been lower and then it increased since you got the GFE; currently prime is 7.75%.\n\nWhat it kinda sounds like to me is that your HELOC has an introductory teaser rate for a couple of months at 6.625 or there abouts but with the fully indexed rate at 12.3%. What the 18% is telling you is the maximum interest rate cap on the loan. If you take your 12.3% and subtract out the prime rate you have a margin of 4.55%. What this means is that when ever prime goes up or down, add 4.55 to the current rate and there you are.\n\nIf you want to speak to me in some detail about your deal I maybe able to assit you with a much better product.\n\nKevin\nkruorock@firstratelending.com 866-562-6838 x 106
461645
Even though your first mortgage rate is at 5.625%, you would have to consider your blend rate if you opt for a second mortgage. Either way (HELOC or HELON), your interest rate will be much higher than your current rate, so if your blend rate matches or is better than the current interest rates now, then you might be better off just refinancing your property. You also have to consider how long you plan on staying that the current location know. This will allow you to know if your going to recover the cost of the refinancing. Obviously if you do a HELOC or HELON and there are costs associated with them, you will not recover the cost of those items, unless you factor in the interest of the debt consolidation and what your saving in doing that. If you need clarification, feel free to contact me directly.
188619
If you live in the US, you get a tax break in this country.\n\nChances are all of you Home Equity intrest will be tax deductable. There are caveats so consult a CPA.
463291
Home improvements are NOT tax deductible, ever.  The only time they matter is if you sell your home, and only then if your gain on the sale exceeds the current $250,000 individual/$500,000 married couple gain exemption...in which case the cost of improvements would be added to the original cost basis of your home, and then only the difference between THAT total (LESS the $250K/$500K exemption) and the ultimate sales price you received would be taxed.\n\nThere is talk of the IRS doing away with that $250K/$500K gain exemption...so hang onto your receipts and records...because if that happens, you may need them later to help with taxes when you sell your home.
26015
That depends on the amount of the gain, your overall tax bracket, the amount of tax already paid for the year, etc., etc. The best strategy is to use a tax planning tool and put all the information in for the year including your filing status (single, married joint, married separate, etc), wages, tax withheld, whether or not you have mortgage interest or property taxes, interest and dividends as well as the capital gains. IF you come up short, you should pay Federal and state estimated taxes. If not, no reason to do so. You could be hit with a small estimated tax penalty which is basically equal to the amount of interest due on the amount of the underpayment if you come up significantly short.
210067
I looked into interest-only loans for investing.  I own 5 investment properties, 3 with no mortgages, 2 with just under 27 years left on 30 year fixed.\n\nIn my opinion, interest-only loans are designed to rip-off people who aren't very good at math, or those who have too much money.  Which are you?  If you are neither, compare the various loans looking at parameters that are important to you.  For me, it was the amount I paid in interest and the amount of the total payment (P&I).  I would have done shorter term than 30 years, but with vacancy, I needed a sure thing.\n\nI don't like debt very much, that's why I bought three of the houses with cash.  When I recently re-fied the 2 with mortgages, I kept the existing terms of ~27 years instead of extending out to 30 years.  I am also paying extra principal on the one that I intend to own and keep in the family for generations.  I hope to have that paid off in about 10 years, savings about 100K in interest.  Overall, I am not yet cash flow positive except on the 3 without mortgages, just one more reason I prefer cash.  BTW, these are in Pittsburgh, PA, where you can (or could 2-3 years ago) buy a house in ok condition for under 20K.  The 2 with mortgages are multi-units (triplexs) and around $100K to purchase.\n\nBest of Luck
132693
Yes, you can.  Some lenders will actually lend up to 125% of the value of your home in first or second mortgages.  Keep in mind that the interest rates on these types of loans will likely be much higher than standard equity loans because of the increased risk to the lenders.  Generally, these lenders are not banks but finance companies.  Personally, I would wait until your house appreciates in value and/or you pay down your first mortgage OR get a non-equitized line of credit through your bank or credit card company.  MBNA and Capital One have accounts like these at reasonable rates.
438836
The receiver doesn't have the option to just turn a payment into interest only.  You first need to consult the loan agreement as to how the payments are to be applied.  If the agreement allows him to do that, you are getting screwed because you will never pay down the loan and you will be in debt on the property forever.\nIf the payments are interest only, you can deduct that amount on schedule A.  You should receive a Form 1098 from them detailing the exact interest amount.  If you did not receive one, request one.\nJust a note - the cancelled checks may not be enough to substantiate the deduction.  You will also need the loan agreement or the Form 1098.
888609
Before you pay off your mortgage, please double check the copies of the original documents. More than likely, your accountant did this, but just to be safe, I recommend double checking them. The reason I say this is because even though the prepayment penalty may be illegal, unrecognized, or whatnot, in your state, if you agreed to one on your Mortgage/Deed of Trust or your Note, you are liable for that prepayment fee. It isn't often that you see this, mostly lenders will do it if they think the loan is risky. But my opinion would be that if your accountant suggested paying this off, then it is in your best interest. You will lose the interest deduction on your taxes, but it's possible that you're at a point where it won't make that big of a difference to you financially. Though that is a question that you may consider running by your accountant. Good luck and congrats on being able to pay off your mortgage!
703046
You say you don't have the equity to sell to an end user though a Realtor.... then do you have enough equity that an investor will be willing to buy it?\n\nFor someone to assume the loan, rather than get a new loan today, the interest rate must be worth it, and it needs to be a fixed rate.  Make sure that if someone offers to have you "transfer" the ownership to them, that they either get a new loan or actually qualify through your mortgage company to assume your loan and that you get a release of liability.\n\nIf you don't have enough equity for this, then rent it out to people with good credit until you do have the equity.
458072
As I say very often, be careful with who you are getting your answers from on this site....some of the answers that you have received are not exactly true.\n\nFirst, the advantage of the interest only loan is the fact that you will be paying less.  That has been established on here already.  Although whether the property is a rental property or the one you are living in really has no bearing on whether the loan is good or bad.  The person paying the mortgage back is going to determine that.  It does not matter what type of property is.\n\nAs far as qualification, yes, they are easier to qualify for.  NOT because you are only paying the lender their interest; but because your debt ratio will be lower than a normal type mortgage payment requiring Principal and Interest (P&I).\n\nThese loans are great for people that have investment properties and they need some flexibility; for people with high yeilding investments that they are investing the difference of the mortgage payments into...etc.  These loans are NOT for those wanting to qualify for more house.  There is not a more stupid move to make and if a lender or a salesperson is telling you this, run as far as you can cause they are misguiding you.\n\nIf you would like more information on these types of loans or others, please feel free to contact me at timothy.kazee@americanhm .com and we can talk more.  \n\nTim Kazee
586914
Most people are taking interest only loans.   This is not a problem if you plan on staying in your home forever, and don't mind the fact that you are never building up equity.  However, if you plan to sell in the future, this could be a big problem if the market crashes because you will owe more than your house is worth. Be careful!
67614
If you have a mortgage on your home you could possibly roll that high paying interest into your mortgage.  I'm not sure what a good rate is for personal loans, but with mortgages that's outrageous.  At least if you're able to consolidate that debt into your mortgage you can receive a tax deduction.
940371
You should be able to technically do this as long as the new home equity loan + the 1st mortgage are not more than 85% of the home's total value.  This is generally the cap.\n\nSo if you have a home that's worth $200,000: 85% of that is 170,000.  As long as the new home equity loan and the mortgage balance added together are less than that amount, you should be OK.
742020
I think the answer is no, because your tax relief on the outstanding mortgage is greater than the interest paid.