Tax Advantages Of A Small Down PaymentWritten by Syd Johnson
A big mortgage plus small down payment equals tax advantages?If you are like most investors you will finance most, if not all of purchase price for your home. Once you move in, home ownership honeymoon is over, you will probably get urge to speed up your payments and get out debt as soon as possible. But, should you deplete your cash reserves and increase your mortgage payments to pay off loans? Are you comfortable with a large debt? The answer depends on your comfortable level with such a large debt and your tax situation. Your annual mortgage interest payments and property taxes are tax deductible. Depending on your income and value of your home, you are probably looking at deductions of a few hundred to a few thousand dollars off your taxes. Once these deductions are schedule, you lower amount of your real income, can end up in a lower tax bracket and pay less tax. Mortgage interest deductions lower your tax bill The compound effect of lowering your tax bill over a 15-year or 30-year time span cannot be overstated. If you feel tempted to pay down you mortgage earlier remember that you can use cash you have on hand to invest in other resources such building up your own business and stock market.
| | Debt ConsolidationWritten by B Hunter
There are many reasons why people get into debt - some of them self inflicted and some of them way outside of our control. Losing a job, illness or accidents, all of these can suddenly plunge one into unexpected expenditure, and often only way to deal with emergency is to use debt. There is a tendency, however, to keep on borrowing once you start. This is because process becomes so easy - credit card companies and banks seem keen to throw cash at you, and interest payments, when regarded individually, often seem insignificant. Before you know it, you are deep in debt, owing money to several institutions and card companies, and bills are mounting. This is stage when one starts to notice infomercials and TV ads for 'debt consolidation'. Put simply, debt consolidation involves replacing a number of smaller debts at varying rates and conditions with one single 'super' debt at a single (often lower) interest rate and set of conditions. For some people, consolidating debt may be a good thing - for other people it may be bad. It all depends on an individual's circumstances. To explore this, lets look at types of debt. Some debts are 'good'. Mortgages and student loans are good debts because firstly they have funded purchase of a valuable asset (a home or education) and secondly because they are usually tax-deductible. Aside from loan-sharking (which you should, of course, NEVER consider!) running up debts on credit cards is worst form of borrowing, as interest rates are frankly usurious, and card companies actively try to encourage you only to make minimum payment, thus keeping you in debt for longer, and maximizing amount of interest they suck from you. So is debt consolidation a good deal? It depends. If you are really under pressure, and need a breather, sometimes consolidation can be only way to get yourself some space in which to sort out your life and finances. The downside is that consolidation payments, while appearing to be smaller than sum of your previous debts, usually last for a longer term, meaning that you effectively pay more over life of loan. And this, of course, is how consolidation companies make their money - they have to profit in some way, otherwise why would they bother?! One VERY important point to note is that your debt consolidation company must allow you to 'overpay' - pay more than standard monthly payment if you wish. You may have a sudden windfall, or a payrise, and paying down debt makes perfect financial sense. If they WON'T let you overpay, look elsewhere - there are plenty of debt consolidation firms out there who want your business!
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