Make your debt deductible with a cash-out refinance
Debt comes from a variety of places and can add up quickly. A mortgage is typically a good form of debt, but other issues – medical bills and other emergencies – can make it tough to repay what you borrow.
What is a cash-out refinance?When you do a cash-out refinance, you get a new loan for what you owe plus any additional cash you may want to take out, provided you have the equity to cover it. This can change your mortgage terms. If you opt for another 30-year loan, your cycle starts all over. But if you decide to do a shorter term loan, you could take time off the loan term, though your monthly payment will likely go up.
If you have a second mortgage, you can roll the two loans together into one home loan and have the option to take cash out, so long as the total loan amount is not greater than the appraised value of your home.
Control your debt and make it deductible
You can use the lump sum from your (888) 983-3270cash-out refinanceto pay off all other debt you may hold. For example, you can consolidate your credit card debt with your mortgage debt to lower the interest rate, and you may reap a tax deduction for doing so. Generally speaking, depending on your eligibility, you may be able to deduct mortgage interest up to $100,000 in home equity debt. There are certain limitations though, so check with a tax adviser to determine your own eligibility.
If you take a cash-out refinance and combined other debt with your mortgage, you could wipe out what you owe from the other sources in one fell swoop. Once you make the payment, the debt gets combined with your home loan – which could give you a lower interest rate and make it tax deductible, since you can deduct mortgage interest if you itemize on your tax return. You should check with your tax adviser.
Make sure you can deduct debt after a cash-out refinance
Consolidation could make that new debt eligible for deductions if you fit certain criteria. The home loan must be on your first or second home. To determine how much you can deduct, you should check with your tax adviser.
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