How much of your home equity loan interest is tax deductible?Written by Syd Johnson
To find out how much of your home equity loan is tax deductible, you must look amount of money that you borrowed and purpose for borrowing it. As with all other financial products, before you start counting savings from using a home equity loan to finance any type of debt, you must take a complete look at your financial picture, IRS schedules and deductions rules, and consult your tax advisor to make sure that you are getting your legal deductions and not paying back more than is needed to IRS. Currently, you can deduct interest on first $100,000 that you borrow on a home equity loan. This money can be used to finance cars, education expenses, credit card debt, home improvements, home repairs and more. All of these items if done separately would carry their own varied interest rate. In addition, interest on some of items would not be tax deductible. If you wrap them up all under $100,000 home equity loan, you can usually get a low interest rate and get to deduct interest payments on your annual tax returns.
| | So which is better fixed rate or adjustable rate mortgage?Written by Syd Johnson
This is a question that keeps coming up when customers start looking at purchasing or refinancing their home. If you look at average 30 or 15 year mortgage, it seems that better mortgage depends on type of customer.The best mortgage is one that fits in your long term budget, won’t use up too much of your monthly income, and gives you a sense of control over your home so you don’t end up house rich and cash poor. Let’s look at basics. Fixed rate gives you stable interest rate and predictable payments A fixed rate mortgage gives you sense of control because you know what your interest rate will be for next 30 years. The only concern is that market rate might go down at some point in future and you will end up paying more than current interest rate. You can change this by refinancing loan to lower your payments and get a lower interest rate. Adjustable gives you ability to change up or down with market index An adjustable rate mortgage allows you to play with market rate knowing that sometimes you will be more than market interest rate, and other times you will be paying slightly less. Overall, if economy stays healthy you should feel like you made best decision and did not overpay for your home.
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