There is a lot of misinformation in the mortgage industry floating around. If you are considering buying a home or already own a home and have been considering refinancing, this information can lead you down the wrong path. In fact, these myths and misconceptions can end up costing you thousands of dollars or prevent you from owning a home. Here are some of the more common pieces of misinformation that you should be clear about when you decide to buy a home.
1. The Mortgage Interest Deduction isn’t going to be around for long.
One of the main benefits of having a mortgage is the major tax deduction that you can take advantage of when it comes time to do your taxes each year. But in the last couple years, there have been many people saying that this deduction may not last much longer. The National Commission on Fiscal Responsibility and Reform even recommended that this deduction be reformed in order to significantly reduce the size of the deduction.
The fact of the matter is this: While major changes were proposed regarding the Mortgage Interest Deduction, economists and housing industry experts have pleaded the case with Congress against imposing reform on this major tax benefit. They argue that it would only lead to a further crippling or the housing market which is something that nobody wants – including Congress. For this reason, the Mortgage Interest Deduction is going to be safe for quite some time.
2. Without equity, you can refinance your mortgage.
If you don’t have much equity built up in your home, you’ve probably heard from some people that you can’t refinance your mortgage. This is a common misconception that homeowners who are underwater in their mortgage are simply stuck. In some cases, you may be stuck in your situation. But there are some instances in which you have a couple options. For one thing, if your mortgage loan is secured by Fannie Mae or Freddie Mac, you may be able to refinance your mortgage for as much as 125 percent of its current market value. That means that if you have a $100,000 mortgage, you might be able to get your loan refinanced for an amount up to $125,000.
Another option that you might be able to take advantage of if your mortgage is not backed by Fannie or Freddie is the FHA “Short Refi” program. This program, however, is only available if you are current on your mortgage payments and if you need to refinance your mortgage loan for up to 115 percent of its current market value. At last check, only a few hundred people have applied for this refinancing program so you will probably have a good chance of benefitting from it.
3. If you lost your job, you should just let the bank take back your home. While being able to document your income is typically a requirement in order to get a refinance or a loan modification, there are some programs designed to help you if you have lost your job and your income. These programs are most prominent in the states that have been hit the hardest by the weak housing market, such as California, Nevada and Michigan.
The United States Treasury Department has a fund titled the Hardest Hit Fund and it allocated nearly $8 billion to the hardest hit states. Troubled homeowners can get as much as $3,000 each month for up to three years to help avoid foreclosure for those homeowners who have lost their jobs. If you have lost your job and need help paying your mortgage, you can contact the appropriate agency in your state to inquire about what is available for you.
With all of the mortgage problems and troubled homeowners in the United States, you should know the truth about your mortgage and the help and programs that are available to you. With the information above, you are in a better position to make an educated and informed decision about or you.
With all of the mortgage problems and troubled homeowners in the United States, you should know the truth about your mortgage and the help and programs that are available to you. With the information above, you are in a better position to make an educated and informed decision about deducting your mortgage interest on your taxes, refinancing your underwater home and getting financial help for your mortgage if you have lost your job.