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tax

Mortgage Interest Rates about to go up due to new HIDDEN tax

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All home mortgage interest rates are about to go up due to new hidden tax congress buried into all new mortgage loans.

As part of the deal to extend a temporary reduction in payroll taxes, Congress last month approved a permanent increase in the fees borrowers pay on mortgages backed by Fannie Mae, Freddie Mac and the FHA.
The increase is an annual charge of at least 10 basis points – equal to one-tenth of one percent of the loan amount. That’s equal to an additional $300 a year on a $300,000 mortgage, or an additional $25 a month. The increase is proportional, so a borrower with a $150,000 mortgage would pay another $150 a year, one with a $400,000 loan would pay an additional $400, etc.        LOCK NOW

Watch the video from Frank and Brian to learn more, and be sure to COMPLAIN to Washington. Of course this is also a great time to mention the importance of who you select to be President…  DO YOUR HOMEWORK!

Thanks Washington…  Nice move

Boost your 2011 tax deduction, Pay your January Mortgage in December

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Boost your mortgage interest deduction by paying your January mortgage payment in December!

Minneapolis, MN: Every penny counts when trying to save on your tax bill. One simple way to boost to your 2011 federal tax refund is to make your January 2012 mortgage payment while it’s still December.

It’s a simple tax strategy that works because of how the tax code is written, and how  mortgage interest is paid in “arrears”.

Different from rent which is paid for the month ahead (i.e. “you’re paying January’s rent”), mortgage payments are made only after mortgage interest has accrued (i.e. “you’re paying for money you’ve already borrowed from the bank”).

This is called “paying interest in arrears” and U.S. tax code states that the mortgage interest is tax-deductible in its year paid, not when due. Therefore by making the January 2012 mortgage payment in December 2011, homeowners who itemize their on their tax returns can apply their January mortgage payment’s interest portion to their 2011 tax returns.

If you choose to pre-pay your mortgage and typically send your payment via snail mail, give your check ample time to be delivered to your lender, and processed. Mail your check no later than Saturday, December 24. Those who pay online (like I do) , just give the payment enough processing time to post. Those who have automatic bill pay need to adjust your online bill pay program early enough to have your mortgage payment post no later than Thursday, December 29th to allow for processing time.

I’m a mortgage guy, not a tax guy, so be sure to consult your tax professional for advice in your unique situation.