Personal Finance Review

You’ll need to earn $2.00 for every $1.00 you want to spend assuming you pay 50% of your earnings on income tax, social security and Medicare. On the other hand, you get to keep 100% of every dollar you save on your personal expenses because the taxes have already been paid.

January/February are when you start to sort out income and expenses to prepare your tax returns. While you're preparing for tax time also take the time to review your expenditures with the diligence of an exuberant IRS agent on commission.  It’s an exercise that most people don’t feel they have time to do but the rewards make it entirely worthwhile.

• Get comparative quotes on insurance – car, home, other 
• Review and compare utility providers 
• Review plans on cell phones 
• Review plans on cable TV, satellite for unused channels and packages or receivers 
• Review available discounts on property taxes 
• Consider refinancing home – lower rate, shorter term or cash out to payoff higher rate loans 
• Consider refinancing cars 
• Call credit card companies to ask for a lower rate 
• Review all of the automatic charges on your credit cards – consider no-fee cards 
• Search for late fees that are regularly being paid and eliminate them. 
• Review all bank charges for accounts and debit cards; determine if they can be reduced or eliminated.

If you don’t want to review your credit card accounts, consider reporting the cards stolen so that new numbers will be issued.  You can notify the companies that need your number.  Companies who might have your number won’t be able to automatically renew services that you may no longer be using.  You can be assured that they’ll contact you when the old number doesn’t go through and you can re-evaluate the decision at that time.

Refinance to Remove a Person

Most people are familiar with the various reasons a homeowner refinances their home which generally result in two major benefits: saving interest and building equity. 
2. Shorten the term
3. Take cash out of the equity
4. Combine loans
5. Remove a person from a loan


There is however another reason to refinance which may not be as common which is to remove a person from the loan. In the case of a divorce, when one party wants to keep the home and the other party wants their equity out of the home, it is possible for the remaining party to refinance the home. If the equity is sufficient to justify it and the remaining owner can qualify for the new loan, the refinance can provide the proceeds to buy out the other spouse.

Refinancing to remove a person from the loan could also involve a situation where two or more heirs jointly own a property and have differing opinions on when to sell. The same situation could apply to a rental property with multiple owners and the refinance would provide a way to buy out a partner.

Sometimes, it’s not about taking cash out of the home to buy out the other party. If a person’s name is on the mortgage, they’re responsible if it goes to default. One party may be willing to deed the home to the other party but it doesn’t necessarily relieve them of the liability of the mortgage they originated.
Many times, once a person has made their mind to move on, they’ll take the fastest and easiest way out. Removing a person from the deed or a mortgage is a reason to consider obtaining legal advice to protect your interests. Refinance Analysis calculator.

Reasons to Refinance

1. Lower the rate

The market has changed and if you need information about the current value of your home please contact me at 508-596-3501 or drop a note to marilynmessenger@realtor.com. I would be happy to provide you with the information you need.
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Check out the latest market reports for Wayland, Sudbury, Concord, Maynard, and Stow at www.marilynmessenger.com.

Mortgage Interest Deduction

Originally, in 1913 with the Sixteenth Amendment, Income Tax allowed a deduction on any interest paid by a taxpayer. Prior to World War I, most interest was paid for business purposes and very little paid by individuals. Credit cards, revolving credit, student loans and home equity loans that would charge interest would not become popular for decades.
However, by the 1930’s, the Federal Housing Authority was created to help people to finance homes. Later, other quasi-governmental agencies like FNMA, FHLMC and GNMA were created to help facilitate mortgage lending.

Even though, Congress never intended to use this deduction to encourage homeownership, it has certainly benefitted millions of people who couldn’t pay cash for their home. This deduction has made owning a home more affordable for tens of millions of people.

The Tax Reform Act of 1986 eliminated the deduction of interest on most personal debt with the exception of qualified mortgage interest debt. Two new terms were introduced to specify what was qualified.

Acquisition Debt is the amount of debt incurred, up to a maximum of $1,000,000, to buy, build or improve a principal residence or second home. It must be a recorded lien and the amount cannot be increased by refinancing. In other words, the acquisition debt is a dynamic amount that decreases as the loan amortizes.

Home Equity Debt is any amount up to a total of $100,000 over Acquisition Debt. It must also be a recorded lien against either the first or second home. It can be used for any purpose and is no longer restricted to medical or educational purposes.

In the example below, a person borrowed money to buy a home and the entire first mortgage was acquisition debt. The unpaid balance was reduced by the payments made and the acquisition debt followed accordingly. At some point in the future, after the home had gone up in value considerably, the owner refinanced a much larger amount.

The existing acquisition debt was transferred into the new mortgage. Any borrowed funds that were used for capital improvements could be added to the existing acquisition basis. The interest on those funds would be deductible.

The owner/borrower could also deduct the interest on up to a maximum of $100,000 of home equity debt. If there was still debt above the acquisition and home equity debt, it would be classified as personal debt and the interest on it would not be deductible. 



















Lenders are not concerned if they are making a tax deductible mortgage on a home. They want to make sure there is sufficient equity in the property to secure the mortgage should it have to be foreclosed. A homeowner should consult with their tax professional if there is a question about deducting the interest on their mortgage.

Click Here to use a Refinancing Analysis.
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Search for homes and get the latest market information for homes Wayland, Sudbury, Concord, Maynard, Stow and west of Boston from a local Certified Residential Specialist and Buyer Broker/Agent.