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Mortgage interest deduction question
Posted on 1/17/13 at 5:08 pm
Posted on 1/17/13 at 5:08 pm
Would it be wise to get another mortgage on my home to pay off student loans so that I may deduct more interest?
2
Posted on 1/17/13 at 5:25 pm to LSUSUPERSTAR
Yes. Or No. Without numbers this is impossible to answer
Posted on 1/17/13 at 5:43 pm to ItNeverRains
quote:
Without numbers this is impossible to answer
This.
If your current rate is high that by itself could be reason enough. If not you might be better off with an equity line.
Bear in mind that normally with a mortgage or equity line the flip side is that you could lose your house if you can't make the payment. However, you can't get out of student loans anyway so this risk is somewhat lower than usual.
Posted on 1/17/13 at 6:03 pm to foshizzle
Would I also have to itemize and overcome the standard deduction for it to be beneficial?
Posted on 1/17/13 at 6:11 pm to LSUSUPERSTAR
Need to post numbers. For example I have student loans ranging from 2-7%. So it would be yes to a 7% range and no to a 2% most likely. U would have to itemize as home mortage is not deductible if u take standard, and it is not easy getting over standard deduction with rates being 3-4%.
Posted on 1/17/13 at 6:32 pm to LSUSUPERSTAR
quote:
Would I also have to itemize and overcome the standard deduction for it to be beneficial?
Not necessarily. It would probably help regardless but again we need numbers.
Keep in mind that even if the standard deduction is better this year, that might not be so a few years from now. Also, you may have substantial 401(k) or IRA contributions that you are also deducting ten years from now.
That said, unless you have a lot of student debt it may not be worth the expense of refinancing. And if you do have a lot, you may not be able to borrow enough. Again, numbers are needed.
Posted on 1/17/13 at 7:24 pm to foshizzle
quote:
Also, you may have substantial 401(k) or IRA contributions that you are also deducting ten years from now.
aren't those pre-tax and have nothing to do with the standard decuction
Posted on 1/17/13 at 7:45 pm to foshizzle
Also if the loan is a second mortage line of credit for this sort of thing, It should be inexpensive to get the money. Most banks do it for $500 if u have the equity.
Posted on 1/17/13 at 8:59 pm to TigerintheNO
quote:
aren't those pre-tax and have nothing to do with the standard decuction
No. If you are claiming the standard deduction you can't itemize.
Posted on 1/18/13 at 1:50 am to foshizzle
quote:
No. If you are claiming the standard deduction you can't itemize.
Correct, but your 401K contributions are pre tax, right?
Posted on 1/18/13 at 6:34 am to TigerintheNO
Yes 401k contributions have nothing to do with the standard deductition
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