For my people it is the only way they will be able to purchase a home in their lifetime. So, if you are planning to purchase a home in the next year it would to your benefit to find out as much as possible on FHA and any other programs that might be available to you. Most of these programs are not permanent so it is important to act quickly ... Read more
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It is important to note that there is a difference between a home equity line of credit and a home equity loan and this is very important since there are consequences to each type of loan. These differences are important to note especially when considering the taxes of an individual and how much interest can be deducted on the individual's taxes. Home equity loans have a number of specified characteristics that differ from the home equity lines of credit that individuals can receive and this will come into play when the individual files their taxes. A home equity loan has a fixed interest rate which does not change over time, as well as regular monthly payments that have been timed and sized to be paid off over the defined time limit, as established by the financial institution that gave the individual the home equity loan. A home equity line of credit, using the anagram HELOC, has different aspects. This line of credit does not have a fixed interest rate. Instead, the HELOC has an adjustable rate of interest. The interest rate is typically tethered to the changes in the prime rate of the line of credit. In response, the prime rate of the line of credit is tethered to changes that have occurred within the targeted federal funds rates. The HELOC is considered by the IRS to be a second mortgage on a home. Any mortgage that is placed on a home that is not the primary mortgage or loan taken out in order to purchase, build or reconstruct the home is considered to be a second mortgage. As a result, the HELOC is considered to be a second mortgage and thus deductible as a second mortgage if the individuals are able to meet the criteria necessary and set forth by the IRS. By definition, it is possible for the HELOC to be considered as a second mortgage and thus the interest is deductible on the person's taxes. Limitations that exist include that the individual cannot deduct more than $100,000 in interest per year. If a couple is married but filing separately, the individuals, on their own, may not deduct more than $50,000 each.
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