Posted by E.Eka on October 20, 2003 at 08:02:05:
2nd interest secured by your primary residence is a deductible expense, regardless of what the money is used for. That was a recent inclusion to the tax code due to some HEAVY lobbying.
Interest Only Home Equity Line of Credit - Posted by Randy
Posted by Randy on October 19, 2003 at 17:23:43:
I am looking for advise on Interest Only Home Equity Line of Credit. I
have conventional 30 yr. mortgage at 5.8%. I have been approved for a
Line of Credit at .2% above prime with 100% of interest being paid up
front and no amortization of the principle, which will currently cut my
montly payment by about $200. I could pay off the existing mortgage
and have $47K to use for any other investing. The $47K would only be
applied if I write on it. My concern is the % rate being tied to prime and
if the interest is paid up front, do I still get tax advantages once interest
is paid. Open to suggestions.
Randy
Re: Interest Only Home Equity Line of Credit - Posted by ed
Posted by ed on October 19, 2003 at 21:41:07:
when you say “paid up front”, you don’t mean that when you make a draw on the line that they compute the interest for the whole payback period/term and lump it on in advance, and you just pay on this for however many months?
if so, and you die tomorrow, and your spouse has to sell the house, your estate will wind up paying a few thousand percent for the use of the money.
I’m hoping it’s not that, but just the normal heloc that everyone is offering. If the floating is bothering you, get fixed rate loan, as opposed to the line. The drawback is that you take the whole amount at the beginning, and pay interest from day one.
regarding interest, Dimpil is right, check with a tax guy, but I thought second interest was deductible. On the heloc you will pay interest only for a period of years, but then will start paying on principle as well (but there will still be interest to deduct till the loan is paid off)
good luck,
ed
Re: Interest Only Home Equity Line of Credit - Posted by Dimpil
Posted by Dimpil on October 19, 2003 at 17:32:26:
Your accountant is the best person to answer that.