There are a lot of tax benefits for home owners, some of which include deductions on expenses paid during your mortgage closing. However, there are a lot of categories included in your mortgage closing costs, not all of which are deductible. To determine which closing costs involved with your mortgage are deductible, read on.
* Points are deductible on your tax return during the year in which they are paid. For example, if you pay points on your closing costs during the year 2010, you can deduct them on your 2010 return. Points are the costs of obtaining the loan, or a loan origination fee. Most points are equal to 1% of the total mortgage.
* Seller’s paid points are deductable by the buyer as an expense if there is an agreement that the seller will pay the points on the mortgage. However, the seller is not able to claim those points on their tax return; rather the net gain on the sale of the home is reduced by the amount of the points paid.
* Interest costs are fully deductible through the first 10 years of home ownership. During the closing, you will prepay interest through the month, especially if you close in the middle of the month. Prepaid interest is deductible on your tax return.
* If you make too much money, there are limitations on the amounts that you can deduct. For matters in regards to this, it is best to contact a tax professional to assist in filing your taxes. A certified public accountant will know the limitations and can apply them to your taxes in the proper manner.
* Pro-rated property taxes are also deductible. In most cases you will have to pay pro-rated property taxes on the property at the closing. This expense is completely deductible when you file your return.
Closing costs consist of many fees totaled into one lump sum to be paid upon closing of the house. Some of these expenses are tax deductible depending upon your income and the purpose of the fees. Points, interest and property taxes are a few of the items that are considered tax deductible. To get the maximum deductions allowed, it is best to talk to a tax advisor or CPA to determine how much of your closing costs is deductible.
The United States has been facing an economic slowdown, the economy is facing an economic crisis which is in fact affecting a lot of other countries. Because of this crisis, there would be times that we hoped that we could have something, like our own home, but uncertain on how to. If you would like to have your own home but circumstances prove to be difficult, then federal housing grants could be an option.
There would two types of federal grants that you can apply to:
• Urban Development Grants – this federal housing grant is to help low-income families to own their own home. But there are certain qualifications that you would have to meet before you are approved to have a federal grant. To apply for this grant, you would need to have a steady employment that would enable you to earn enough to pay the mortgage. The house should also qualify in the quality standards set and relatively less below the value cap.
• Rural Development Grant – this type of grant is for moderate-income earners in a rural area. The home should be in a rural area and should also meet the standards and requirements set. The same with the urban development grant, you are also required to have steady source of income, good credit history and should have enough money to pay the remaining costs.
The government is taking a step in further improving the possibilities of increasing the number of people living in their own homes. In 2009 about $11.5 billion is allocated by the government to federal grant money to help those who would need allocations.
Federal grant money allows the recipient to make a down payment immediately to the house that they want to buy. Aside from this, federal grants can also provide financing to those who would need home renovations. There are also block grants which would allow the grant recipient do some home repairs because of weatherization. This grant is formally known as the Community |Development Block Grant Program which extends support to both low and medium earners.
This fund can be used for community development activities, construction of school buildings, starting job creation/ retention activities, restoration and preservation of historic properties in some depressed neighbourhoods.
Federal grants for housing are available for businesses, non-profit and non-government organizations and even to individuals and their families. Information about the federal housing grants can be acquired first-hand by contacting the Department of Housing and Urban Development (HUD), they also have a website where housing grants can be checked. The Catalogue for Federal Domestic Assistance (CFDA) also offers a information about the housing grants.
Upon getting information about the federal housing grants, there are application forms readily available in the internet, or you can get the forms directly from the HUD office. Make sure to read the application thoroughly and complete it in the same way.
Follow the structure and format requested. Also provide the necessary information and documents required to make sure that it would be processed accordingly. There are grants which require the applicant to show up personally to complete the process. Make sure that you attend to the appointment and bring all the documents that you were instructed to bring.
If you are a tenant, they you can also ask if are legible for tenant assistance. There are grants that would provide you an allowance that would cover your household expenses. Your landlord needs to agree with you so that you would be able participate in the program and get the grant.
When applying for a federal grant, you would have to remember though, that it does not come “free” at all times. It also follows a set or rules and requirements that you would have to abide to, so that you would be able to receive the grant. Since not everybody is eligible to get the grant, it is important to know if you are qualified before you even apply.
Federal housing grants are made available to the public so that people would benefit from them, so start asking around and processing the application!
Reverse mortgages have existed for a few decades, but only recently have they received a significant amount of press. Touted as a way for senior citizens to utilize the equity in their homes, reverse mortgages have become increasingly common. But is a reverse mortgage right for you?
As the name suggests, a reverse mortgage is pretty much the opposite of a regular mortgage. Instead of taking out a loan to buy a home, you put up your home as collateral and receive money. But unlike a home equity loan, you do not have to make monthly payments. No payment is due until the borrower dies, sells the home or moves out for twelve months or more. When one of these events occurs, the loan must be paid in full, including accrued interest. This is accomplished by selling the home or obtaining a traditional mortgage.
The proceeds of a reverse mortgage may be distributed in a few different ways. The borrower can take a lump sum payment. He can request a line of credit to use as needed. Or he can elect to receive monthly payments. Some lenders will even allow you to receive payments by two different methods, such as half in a lump sum and the other half as monthly payments.
Requirements for a Reverse Mortgage
Unlike other mortgages, a reverse mortgage does not subject the borrower to income requirements. Since there are no monthly payments, there is no need to verify income. The amount a homeowner is eligible to borrow is dependent on the equity he has in his home.
There are, however, a few requirements that must be met. These include:
* The borrower must be at least 62 years of age. If there is a co-owner who is under 62 years old on the home’s title, that person’s name must be taken off before the loan can be made.
* You must have a certain amount of equity in your home. If you have an existing mortgage, it must be paid off. But you can use the proceeds of the reverse mortgage to do this.
* There are certain criteria that the home must meet to qualify. The owner must live there, and if it’s a multi-family dwelling, there must be four units or less. Manufactured housing must meet certain requirements to qualify.
* Before a reverse mortgage can be made, the borrower must undergo counseling approved by the Department of Housing and Urban Development (HUD). The purpose of this counseling is to make sure the borrower understands how the reverse mortgage works. When completed, the borrower receives a certificate that must be presented to the lender.
A reverse mortgage can provide funds to senior homeowners to use any way they choose. They do not have to make monthly payments, and they can remain in their homes for the rest of their lives or until they choose to move out or need to do so for long-term care. But it’s very important to understand all of the implications of a reverse mortgage before making a decision.
For a long time, it seemed like banks were handing out mortgages on silver platters. Even those with not-so-good credit could find a lender who would work with them. This seemed like a dream come true for those who wanted to become homeowners. But when the housing market went south, lenders began to be more cautious.
Today’s housing market is a far cry from what it was just a couple of years ago. Fewer lenders are willing to serve those who do not have excellent credit scores. Those who are fortunate enough to get a mortgage without perfect credit have to contend with higher interest rates.
But looking for a great mortgage deal is not a lost cause. For those with good credit, there has hardly been a better time to get a mortgage. Interest rates are low, and lenders are willing to compete for the business of well-qualified borrowers. Here are five things you can do to get a good deal on your mortgage.
1. Carefully examine your credit report. If there are errors, report them to the credit bureaus. If your credit is less than perfect, start working on building it up right away. Catch up on delinquent accounts, and make all payments on time for a few months. These measures can make a big difference in your interest rate.
2. Compare rates online. You can find rates for many lenders on the Internet, and some websites allow you to compare rates and terms side by side. Even if you don’t like the idea of borrowing from an online lender, you can find rates for banks with branches in your area. At the very least, this will give you an idea of what to expect.
3. Visit some lenders in person. Most offer several different programs, so it pays to sit down and discuss your needs and finances with them. Determine the best deal a lender can offer you, and get it in writing. Then visit more lenders and compare results.
4. Don’t forget the local banks. Smaller banks tend to minimize their losses by only working with highly qualified borrowers. This means that they can afford to offer lower interest rates.
5. Remember that there’s more to a great mortgage deal than a low interest rate. Make sure you understand the terms of the loan, especially when it comes to other costs such as points, closing costs and private mortgage insurance (PMI). If these costs are high, they could negate the effects of that stellar interest rate.
Getting a good deal on a mortgage can be a time-consuming task. But the rewards may be measured in thousands of dollars. In today’s housing market, it literally pays to shop around.
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