Money from refinancing

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1 total messages Started by Dick King Thu, 25 Sep 1986 19:30

#1178

Author: Dick King
Date: Thu, 25 Sep 1986 19:30

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   From: gnome@oliveb.UUCP (Gary)
   Newsgroups: net.invest,net.taxes
   Date: 25 Sep 86 00:14:52 GMT
   Distribution: na

   What are the ramifications of "taking money out" when
   refinancing your house?

   It looks like a good way to finance major home improvements
   but I am somewhat leary about the long-term effects.

Under the new law, only the interest on (the sum of the purchase price
of the house and the cost of all improvements) is deductible -- the
residue is not.  Also, points must be deducted as you pay the
mortgage. 

You could therefore "cash out" if you use the money for improvements,
provided your current mortgage doesn't exceed the purchase price.
(This can happen if either you have already refinanced and cashed out
heavily, or if you have a mortgage with heavy negative amortization.)

Quick question for the experts: if your mortgage exceeds the purchase
price because of negative amortization, do they really mean to not
make the excess interest deductible?  Suppose you refinance for more
than the purchase price to get "out from under" a mortgage that has
given you negative amortization in the past?

   HELP!?

   Gary
   (allegra,ihnp4,glacier,hplabs)oliveb!oliven!gnome

-dick

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