Home-equity loan deduction can be tricky
• When someone takes out a home-equity loan, how can they calculate the percentage of the interest that is tax deductible when filing income tax returns?
Cutting it kind of close, aren’t you? Anyway ...
There are quite a few variables that go into calculating the proper amount of deductible interest on mortgage or home-equity loans. They include your filing status, the fair-market value of your home, origination dates of previous mortgages and remaining debt.
To address your particular situation, you might want to get your hands on one of two things.
The first is IRS Publication 936, Home Mortgage Interest Deductions. The publication offers a thorough explanation of how such calculations are made, and it includes a handy flowchart to help determine if all or part of your mortgage or equity interest is deductible. You can pick up a copy at your nearest federal building or download one at www.irs.gov.
Wednesday, April 19, 2006
Friday, March 03, 2006
Home Equity Loans: A Choice Favoured By All
Having a roof over your head that you can call your own not only gives you a sense of security, but in times of need can also become an excellent source of credit. In simple terms, your home can turn out to be a great source of money. You can draw out credit against the equity in your home. Such a form of credit is referred to as a home equity loan.
Home equity loans are preferred over other loans for many reasons. For one, you can use the money from your home equity loan in any way you wish. You can use it to remodel your home, or pay off your debts or even finance your child’s education or wedding. The second reason why these loans are so popular is that there are a large number of home equity loan packages available in the market that you can choose from. Thirdly, these loans give you certain tax benefits that other loans do not.
Home equity loans are a favourable alternative for banks too. The obvious explanation for that being that there are a lot of takers for these loans. So, banks earn a lot of business via these loans. Another reason why banks love to lend out home equity loans is that these loans are secured loans. In other words, you have to pledge your home as security to draw out such a loan. In an event where you fail to repay the loan, the bank can always sell off your home and recover its money. So, it always is a win-win situation for the banks.
Although, home equity loans seem like a lucrative option for homeowners in need of some quick cash, you must always be watchful against lenders and brokers who are unscrupulous. They know that you cannot afford your mortgage payments, yet they try and entangle you into taking a home equity loan. Their motive, of course, is to bring your home under the risk of foreclosure.
Your only safeguard against such people is to always research and do your homework before you plunge into the lending market. Also, always stay on guard against any hidden charges in the loan contract. You must remember to read the fine print. Do not hesitate to ask your lender as many questions as you want. Remember, the lender needs your business, not you, so you are in a stronger position. Some caution and a bit of smart shopping can help you find that perfect home equity loan that you so desire.
About The Author:
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. She has done her masters in Business Administration and is currently assisting chance4finance as a finance specialist.
For more information please visit at http://www.chance4finance.co.uk
Article Source: http://EzineArticles.com/?expert=N_Sachdeva
Home equity loans are preferred over other loans for many reasons. For one, you can use the money from your home equity loan in any way you wish. You can use it to remodel your home, or pay off your debts or even finance your child’s education or wedding. The second reason why these loans are so popular is that there are a large number of home equity loan packages available in the market that you can choose from. Thirdly, these loans give you certain tax benefits that other loans do not.
Home equity loans are a favourable alternative for banks too. The obvious explanation for that being that there are a lot of takers for these loans. So, banks earn a lot of business via these loans. Another reason why banks love to lend out home equity loans is that these loans are secured loans. In other words, you have to pledge your home as security to draw out such a loan. In an event where you fail to repay the loan, the bank can always sell off your home and recover its money. So, it always is a win-win situation for the banks.
Although, home equity loans seem like a lucrative option for homeowners in need of some quick cash, you must always be watchful against lenders and brokers who are unscrupulous. They know that you cannot afford your mortgage payments, yet they try and entangle you into taking a home equity loan. Their motive, of course, is to bring your home under the risk of foreclosure.
Your only safeguard against such people is to always research and do your homework before you plunge into the lending market. Also, always stay on guard against any hidden charges in the loan contract. You must remember to read the fine print. Do not hesitate to ask your lender as many questions as you want. Remember, the lender needs your business, not you, so you are in a stronger position. Some caution and a bit of smart shopping can help you find that perfect home equity loan that you so desire.
About The Author:
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. She has done her masters in Business Administration and is currently assisting chance4finance as a finance specialist.
For more information please visit at http://www.chance4finance.co.uk
Article Source: http://EzineArticles.com/?expert=N_Sachdeva
Tuesday, January 10, 2006
A Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit is like a credit card. You can borrow money up to your credit limit, and you only get charged interest on the portion that you borrow. You can pay down the balance, then reuse the credit. Most have a draw term, usually 5 to 10 years, where you can draw money out, then the loan is paid back over a 10 to 15 year period. You may also elect to refinance the Equity Line and get another 5 to 10 years to use the line of credit.
You choose what you want to do with your home equity line of credit:
Remodel your home
Take a vacation
Consolidate bills
Buy a car, boat or RV
Finance tuition or other expense
Use it as an emergency fund
There are many features of HELOC loan programs. Ask your Loan Officer to help you decide which is best for you.
Great Rates: rates can be below the prime rate on some programs.
No Loan Fees: No appraisal fee or closing costs.
Convenient Closings: Some programs allow doc signing in your home.
Credit lines or maximum loan limits vary with each program.
Pricing varies with the LTV.
Accessing the cash in your credit line can be done by writing a check, charging on a credit card or making a withdrawal at a financial center.
Many of these programs have an early termination fee.
Some programs may offer a fixed rate loan option feature, where you can lock in a fixed rate on all or a portion of your outstanding balance.
Pricing is based on your Credit Score. These cutoff limits are fairly strict, so if your score is just below the next higher range, you may want to discuss how to improve your score with your loan officer.
A HELOC is usually 100% tax-deductible*, and a smart way to consolidate debt, pay for home improvements, new automobiles, student loans or even vacations or weddings.
Home Equity Fixed Rate Loan
You may prefer a home equity fixed rate loan compared to a HELOC. Home equity fixed rate loans offer a wide variety of amortization periods (length of time to pay it back), more choices for people with less-than-perfect credit, fixed rates so your rate can never go up and the interest paid may also be tax-deductible*!
* It is recommended that Customers consult their tax advisor. Not all loan fees or interest payments are tax deductible.
Monday, January 09, 2006
Home equity line of credit: Keep it or not?
Home equity line of credit: Keep it or not?: "It's time to consider whether to keep your home equity line of credit or get rid of it.
Rates on credit lines have been rising for a year and a half. Meanwhile, long-term mortgage rates have been falling for a month and a half. This up-down combination gives borrowers a chance to pay off their credit lines with other types of loans.
To decide whether it makes sense to ditch your credit line, you have to do some math and think about the price you're willing to pay for the flexibility of having a credit line.
If the math in this article makes your head hurt, you can ask a mortgage broker or loan officer to crunch the numbers.
Home equity lines of credit, known to mortgage geeks as HELOCs, usually go up and down with the prime rate. The rates on credit lines used to be 2 percentage points lower than rates on 30-year, fixed-rate mortgages, but now they're about 1 point higher."
Read Full Story
Rates on credit lines have been rising for a year and a half. Meanwhile, long-term mortgage rates have been falling for a month and a half. This up-down combination gives borrowers a chance to pay off their credit lines with other types of loans.
To decide whether it makes sense to ditch your credit line, you have to do some math and think about the price you're willing to pay for the flexibility of having a credit line.
If the math in this article makes your head hurt, you can ask a mortgage broker or loan officer to crunch the numbers.
Home equity lines of credit, known to mortgage geeks as HELOCs, usually go up and down with the prime rate. The rates on credit lines used to be 2 percentage points lower than rates on 30-year, fixed-rate mortgages, but now they're about 1 point higher."
Read Full Story
Saturday, January 07, 2006
Fitch Rates $848.31MM Renaissance Home Equity Loan Trust, Series 2005-4
NEW YORK--(BUSINESS WIRE)--Dec. 30, 2005--Fitch rates the Renaissance Home Equity Loan Trust, series 2005-4 $700,872,000 home equity loan asset-backed certificates as follows,
-- Classes A1-F, A1-A, and A-2, through A-6 'AAA';
-- $28,875,000 class M-1 'AA+';
-- $25,813,000 class M-2 'AA+';
-- $17,063,000 class M-3 'AA';
-- $13,563,000 class M-4 'AA-';
-- $13,563,000 class M-5 'A+';
-- $11,813,000 class M-6 'A';
-- $10,938,000 M-7 'BBB+';
-- $8,313,000 class M-8 'BBB';
-- $8,750,000 class M-9 'BBB';
-- $8,750,000 class M-10 'BBB-'.
The 'AAA' rating on the senior certificates reflects the 19.90% subordination provided by the 3.30% class M-1, the 2.95% class M-2, the 1.95% class M-3, the 1.55% class M-4, the 1.55% class M-5, the 1.35% class M-6, the 1.25% class M-7, the 0.95% class M-8, the 1.00% class M-9, the 1.00% class M-10, monthly excess interest and the initial and expected overcollateralization (OC) of 3.05%. In addition, the ratings on the certificates reflect the quality of the home equity loans, the soundness of the legal and financial structures, and the capabilities of Ocwen Federal Bank FSB (Ocwen) as servicer.
As of the cut-off date (Dec. 1, 2005), there were 4,433 mortgage loans, originated or acquired by Delta Funding Corporation, with an aggregate balance of $717,992,636.
The group I mortgage pool consists of loans bearing interest at adjustable rates, including mortgage loans that bear interest at rates that are fixed for two or three years before beginning to adjust. As of the cut-off date, the mortgage pool consists of 675 first lien loans with an aggregate balance of $115,689,998.15. The weighted average current loan-to-value ratio (LTV) for the mortgage loans is approximately 78.73% and the weighted average remaining term to maturity is approximately 358 months. The weighted average coupon (WAC) is 8.054%, the weighted average FICO is 600 and the average balance is $171,393. The three states that represent the largest portion of the mortgage loans are Florida (18.53%), New Jersey (16.41%), and Illinois (8.76%).
The group II mortgage pool consists of loans bearing interest at fixed rates. As of the cut-off date, the mortgage pool consists of 3,758 first and second lien loans with an aggregate balance of $602,302,638. The weighted average LTV for the mortgage loans is approximately 75.43% and the weighted average remaining term to maturity is approximately 333 months. The WAC is 7.877%, the weighted average FICO is 629, and the average balance is $160,272. The three states that represent the largest portion of the mortgage loans are New York (34.94%), Florida (11.19%), and Pennsylvania (5.42%).
Wells Fargo Bank, N.A. will act as securities administrator. Interest and principal payments will be distributed on the 25th day of each month commencing in January 2006. Sub-prime mortgage loans are generally made to borrowers who do not qualify for financing under conventional underwriting criteria due to prior credit difficulties and/or the inability to satisfy conventional documentation standards, and/or conventional debt-to-income ratios. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for these attributes. For federal income tax purposes, a real estate mortgage investment conduit (REMIC) election will be made with respect to the trust estate.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, http://www.fitchratings.com/. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
-- Classes A1-F, A1-A, and A-2, through A-6 'AAA';
-- $28,875,000 class M-1 'AA+';
-- $25,813,000 class M-2 'AA+';
-- $17,063,000 class M-3 'AA';
-- $13,563,000 class M-4 'AA-';
-- $13,563,000 class M-5 'A+';
-- $11,813,000 class M-6 'A';
-- $10,938,000 M-7 'BBB+';
-- $8,313,000 class M-8 'BBB';
-- $8,750,000 class M-9 'BBB';
-- $8,750,000 class M-10 'BBB-'.
The 'AAA' rating on the senior certificates reflects the 19.90% subordination provided by the 3.30% class M-1, the 2.95% class M-2, the 1.95% class M-3, the 1.55% class M-4, the 1.55% class M-5, the 1.35% class M-6, the 1.25% class M-7, the 0.95% class M-8, the 1.00% class M-9, the 1.00% class M-10, monthly excess interest and the initial and expected overcollateralization (OC) of 3.05%. In addition, the ratings on the certificates reflect the quality of the home equity loans, the soundness of the legal and financial structures, and the capabilities of Ocwen Federal Bank FSB (Ocwen) as servicer.
As of the cut-off date (Dec. 1, 2005), there were 4,433 mortgage loans, originated or acquired by Delta Funding Corporation, with an aggregate balance of $717,992,636.
The group I mortgage pool consists of loans bearing interest at adjustable rates, including mortgage loans that bear interest at rates that are fixed for two or three years before beginning to adjust. As of the cut-off date, the mortgage pool consists of 675 first lien loans with an aggregate balance of $115,689,998.15. The weighted average current loan-to-value ratio (LTV) for the mortgage loans is approximately 78.73% and the weighted average remaining term to maturity is approximately 358 months. The weighted average coupon (WAC) is 8.054%, the weighted average FICO is 600 and the average balance is $171,393. The three states that represent the largest portion of the mortgage loans are Florida (18.53%), New Jersey (16.41%), and Illinois (8.76%).
The group II mortgage pool consists of loans bearing interest at fixed rates. As of the cut-off date, the mortgage pool consists of 3,758 first and second lien loans with an aggregate balance of $602,302,638. The weighted average LTV for the mortgage loans is approximately 75.43% and the weighted average remaining term to maturity is approximately 333 months. The WAC is 7.877%, the weighted average FICO is 629, and the average balance is $160,272. The three states that represent the largest portion of the mortgage loans are New York (34.94%), Florida (11.19%), and Pennsylvania (5.42%).
Wells Fargo Bank, N.A. will act as securities administrator. Interest and principal payments will be distributed on the 25th day of each month commencing in January 2006. Sub-prime mortgage loans are generally made to borrowers who do not qualify for financing under conventional underwriting criteria due to prior credit difficulties and/or the inability to satisfy conventional documentation standards, and/or conventional debt-to-income ratios. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for these attributes. For federal income tax purposes, a real estate mortgage investment conduit (REMIC) election will be made with respect to the trust estate.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, http://www.fitchratings.com/. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Thursday, January 05, 2006
Home Equity Line of Credit – Is There a Prepayment Penalty?
For the most part, homeowners are familiar with home equity loans and
home equity lines of credit. With either option, you are able to acquire
funds for emergencies, home improvement projects, etc. Getting a line
of credit and using your home’s equity to your advantage is a huge
benefit to owning a home. However, before completing the credit application,
homeowners should carefully read and understand the credit line
agreement.
How Does a Home Equity Line of Credit Work?
A home equity line of credit is a credit line that is based on your
home’s equity. For example, if you owe $80,000 on a $120,000 mortgage,
your home’s equity is $40,000. When applying for a home equity line of
credit, the lender will approve you for a credit line up to the amount of
your home’s equity. Lines of credit are slightly different than home
equity loans. While home equity loans are also based on your home’s
equity, homeowners obtain a lump sum of money upon approval of their loan
application. These loans are generally based on a fixed rate, whereas
lines of credit have variable rates.
How to Obtain Funds with a Home Equity Line of Credit
Getting money from your home equity line of credit is very simple. Once
a lender approves your line of credit, you will be issued a checkbook
or ATM card. Whenever you need cash, you simply write yourself a check
from your credit line. Because the amount you withdraw from a line of
credit varies, your monthly payments will also vary. If you prefer a
predictable monthly payment, a home equity loan will best suit your needs.
Home Equity Line of Credit Prepayment Penalty
Home equity lines of credit have specific terms. Your lender may
approve your line of credit for 10 to 25 years. At the end of the term, you
must re-apply to obtain another credit line. Home equity lines of credit
are similar to other mortgage loans in regards to prepayment penalties.
Before applying and accepting a lender’s offer, carefully review the
offer and inquire of prepayment penalties. With a prepayment penalty, you
are charged a fee if the credit line is closed before the end of the
term. Typical fees are about $500. However, if the balance on your line
of credit is zero, but the account remains open for future withdrawals,
prepayment fees will not apply.
Here are our recommended Home Equity Loan Companies online.
Carrie Reeder is the owner of ABC Loan
Guide, an informational website about various types of loans.
Article Source: http://EzineArticles.com/?expert=Carrie_Reeder
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