Here are the top ten reasons to consider a refinance even if you currently have a low mortgage rate. Some of them are obvious and some are not.
You are in an adjustable rate loan that is either at a high rate now or has the potential to go higher.
You have a second mortgage or home equity line with a high rate and large enough balance that if refinanced into a new first mortgage would save you money.
You want to use your home equity to make improvements to your house that will increase its value or "livability."
The debt ceiling ... the U.S. Loses its triple A credit rating ... Earthquakes on the East Coast is the world coming to an end? Probably ... (not) but with all these recent anomalies it certainly feels like we are in the Twilight Zone. It has been almost 3 years since the Fed cut its key rate to almost zero. August 9th, the central bank said rates are likely to remain there until at least mid 2013. Even though that doesn’t bode well for the stock market’s prognosis in the future, there are some pros and cons.
The benefits may not flow so easily. Consumers are showing few signs of wanting to borrow, bank and insurance companies profits are most likely going to suffer and with the stock market sliding, pensions and 401ks face years of low returns. For consumers, low rates mean cheap loans for everything from a new home to a new car. For the many baby boomers nearing the end of their working lives, low rates also deliver meager returns on fixed income investments. With the stock market well below it’s 2007 highs, that is going to be particularly painful.
Okay, it is week three and the U-haul is loaded and almost to your drive-way. The house is in your name only and your new partner wants to be added to title. What does this mean for you from a tax perspective? If the mortgage is in your name only, but the house is titled to both parties, then the mortgage interest would be 100% deductible for only the person with the legal liability for the mortgage.
If you purchase a home together and both people are on the mortgage and the title, then the interest could be used for the best tax benefit. It is important to note that IRS knows EVERYTHING about you. Properly executing the interest deduction on Schedule A is imperative, or it is likely that you will receive a love letter from IRS.
Before obtaining joint assets it is extremely important to consult with a tax advisor and an attorney for a partnership agreement. There are pros and cons to major life decisions that should be explored while you still like each other!
Gay and lesbian couples have even more to think about when filing taxes. How do we split the mortgage interest and taxes, who claims the kids, what about charity and a whole slew of other issues? It is very important for couples to have a tax preparer who knows the extent of the tax code and how to use it.
For example, did you know that the tax code changed last year relating to children? Before, either parent on the birth certificate or adoption decree could claim the child, thus allowing the child to be on whichever return created the best tax benefit. Now, the person with the higher income must claim the child.
What does this mean to your family? It potentially gets rid of child tax credits and earned income credits for the lower income earning partner and potentially increases the combined tax liability (i.e.- you get less refund if you otherwise would have received one).