Deductible Mortgage Interest When Refinancing

The U.S. tax code allows homeowners to deduct interest on their tax return (Schedule A) up to $1,000,000 in mortgage(s) for their principle residence and second residence plus the interest on up to $100,000 in home equity loan. This interest deduction only applies when the home(s) is/are purchased, better known as acquisition interest.

If you were to refinance either of your residences then the mortgage interest you can deduct is based on your mortgage loan balance at the time you refinanced. For example:

• Purchase price $200,000
• Loan balance reduced to $150,000
• Refinanced for $450,000 at lower interest rate

Your mortgage interest deduction is limited to the interest on $150,000.

Waiting for Your Home to Sell Before You Move?

When you want to close on a new home but your current home hasn't sold yet, there are a number of financing arrangements that can help bridge the gap.

The most common interim financing tool for buyers is a short-term bridge loan which finances the down payment and closing costs for a new home. You repay the bridge loan once your house sells. However, you trade flexibility for a higher interest rate. A better alternative may be a bridge loan with deferred interest payments. It pays off the first mortgage, eliminating one mortgage payment while covering the down payment and closing costs on the new home. As the seller, you often don’t pay anything until the sale of the house. A third possibility is 100 percent financing on the new mortgage. With no down payment needed, you can manage until the home is sold. But you must be approved to hold two mortgages.

The odds of this situation occuring increases when the housing market begins to slow, similar to what we're experiencing in Kitsap County. Obtaining a second mortgage contains some risk. Please check with your accountant since there may be some unintended tax consequences in these senarios.

Here's Where to Find Spare Parts

How many times have we just bought a new household item rather than try to find the repair parts?

The following websites sell everything from refrigerator filtration systems to ethernet cables. These sites are expanding their inventory and making their search functions easier to navigate. Most parts sites sell prices at or near manufacturer's retail price. They are also good sources of parts for older items that stores may no longer keep on their shelves.

Click here for items ranging from washer drier knobs to projector lamps to cell phone batteries.

Click here for consumer electronics such as computers, cameras or home appliances (it's much easier if you have the model number).

Click here for home appliances, lawn equipment, portable electronics and power tools.