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The interest on the second mortgage is deductible but not the home equity loan. If you could deduct the interest on the equity loan also, then you would be double dipping and the IRS doesn't like that. In every situation, one party can and the other party can deduct the interest. Someone has to pay tax on the money transfer.

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โˆ™ 2011-09-13 05:26:27
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Q: Is the interest deductible when you use a home equity loan to pay off a second mortgage?
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Related questions

Is tax on continuing a second mortgage deductible after filing for a first foreclosure?

Even if you have had a foreclosure, tax on a second mortgage or home equity loan is still deductible.

Can a second secured mortgage loan be discharged?

Yes, if there is no equity in the house to secure that second mortgage, or the equity is less than the exemption.

What if you pay your first mortgage but not your home equity?

If you have a first mortgage and a home equity mortgage, the home equity mortgage is a second mortgage. If the home equity mortgage is not paid, the lender can foreclose and take possession of the property subject to the first mortgage. The home equity lender can pay off the first mortgage and keep any excess proceeds from a sale.

What are the pros and cons of borrowing on home equity to pay for auto repairs?

Pro: Interest on the home equity loan is deductible, if you itemize tax deductions. Con: It puts your home under a lien - essentially a second mortgage. If you have a financial crisis it may put your home at risk of foreclosure.

What exactly is an equity fixed home loan?

An equity fixed home loan is a home equity loan with a fixed interest rate. These are used to repair a roof or fix a septic system. The homeowner takes this loan out in addition to the first mortgage and the equity fixed home loan is often referred to as the second mortgage.

Should you get a second mortgage or a home equity line of credit?

Mortgage loans and home equity loans are two different types of loans you can take out on your home. A first mortgage is the original loan that you take out to purchase your home. Second mortgage means cover a part of buying of your home or to cash out some of the equity of your home. It is important to understand the differences between a mortgage and a home equity loan before you decide which loan you should use. Both types of loans have the same tax benefit since you can deduct the interest on each.

What are the advantages of getting a second home mortgage?

A second mortgage allows the borrower access to money at an advantageous interest rate. It makes use of the equity built up in a home as collateral, which is considered a safer investment by lenders.

What is the purpose of an equity home loan mortgage?

An equity home loan mortgage is similar to a second mortgage where it is possible to borrow on the equity of a home. This helps reduce financial pressure like facing a foreclosure on a home.

Can you write off a home equity line-of-credit like you would a first or second mortgage on your tax returns?

You may write off up to 100,000 dollars. Also, the interest expenses you pay on a home equity loan may be deductible no matter what you use the money for. The deduction can save you money on your taxes on your return as long as you itemize your deductions on Schedule A of Form 1040. If you claim your standard deduction, then you can never deduct the interest expenses that you paid on your home equity loan.

How can one apply for a second equity home loan mortgage?

One can apply for a second equity home loan mortgage by visiting a bank and filling out the application. Banks make approval decisions about second home loans according to ones home equity and personal credit rating.

A home equity loan is a lump-sum second mortgage loan made on the available equity in a home?

True, home equity loan.

How does one get a 2nd mortgage loan?

One can acquire a second mortgage from any lender based on the existing equity on the home. Basically, the second mortgage is borrowed on the "paid off" portion of the existing home, which is why it is also referred to as a home equity loan. You should, after having your home appraised, contact multiple lenders to find the best possible deal in terms of both interest and closing costs.

What are the offerings from Paramount Mortgage Company?

The Paramount Mortgage Company offers affordable low interest first and second mortgages on homes and some other forms of equity as well. They have some of the lowest rates in North America.

Can you have 2 mortgage loans through same mortgage company?

Yes. Your mortgage company may hold your first (or primary) mortgage as well as a second which may be represented as a home equity loan or a home equity line of credit.

What is a home equity loan what does it do?

== A home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. Home equity loans are based on the amount of equity you have built up in your home. (Home equity is the difference between the current value of a home and the amount still owed on the mortgage. As the principal of the mortgage amount decreases as a result of monthly mortgage payments, the home equity increases) You can borrow your loan as a traditional home equity loan (second mortgage) or a home equity line of credit (HELOC), which functions in a similar manner as a credit card. These loans are sometimes useful to help finance major home repairs, medical bills or college education. Which type of loan you choose is up to you and your specific financial needs. Both loan types are primarily low interest loans and, for most home equity loans, the interest you pay is tax deductible. However, it is important to know that when you take out a home equity loan, it means the lender can reposes your home if you default on your payments. So it's crucial that you maintain your loan payments. A home equity loan is a great financial resource, but if you don't pay it back, it could end up costing you your home.

What are the interest rates of a 2nd mortgage compared to a first mortgage?

Interest rates on a second mortgage are higher on average than the rates for your first mortgage. Make sure you research what your second mortgage will be before agreeing to one, as there are many factors to consider that can change your payment plans.

How many payments on 1st mortgage until you can get a 2nd mortgage?

This is not determined by the number of payments you make, it is determined by how much equity you have in the home. If the home is worth more than the outstanding balance on the mortgage, you may be able to get a second mortgage or home equity line of credit.

Where can one find an equity loan second mortgage?

One could find an equity loan second mortgage from many websites, such as BankRate and Realtor. One could also check out their local area banks and see what they may have to offer.

Why are interest rates on a 2nd mortgage higher than on a primary mortgage?

A second mortgage is generally riskier for a lender because the second mortgage is subordinate to the primary loan. This means that if the loan defaults, the first mortgage is paid off first and the lender risks losing the money put up for the second mortgage. To cover the extra risk, there is a higher interest rate placed on the second mortage.

Does a second mortgage in the UK typically come with a higher or lower interest rate than the first mortgage?

A second mortgage in the United Kingdom typically comes with a higher interest rate than the first mortgage. This is because the lien is considered to be less secure.

What is the difference between second mortgages and equity loans?

A second mortgage is a loan that involves a second lien on the property. (The first mortgage is the first lien.) Generally, a second mortgage is for a fixed dollar amount paid out at one time, in the same way as a first mortgage, and can be fixed-rate or adjustable-rate. In the early 1980s, a second type of second mortgage appeared that was referred to as an "equity line of credit," which came to be known as a HELOC. A HELOC allows the homeowner/borrower to draw out money as needed up to a certain amount. HELOCs are always adjustable-rate. In short, both a second and an equity loan are "second mortgages." The rate and manner of disbursement are different. A second mortgage, by virtue of the ability to get it as a fixed-rate loan, would be the better option.

Can you have 2 first mortgages on 1 property?

No, the second mortgage would be called a home equity loan and usually interset rates are higher. If a second loan (mortgage) is needed, it may be better to add it to the first and refinance, assuming you have equity in the home to do so

Where can one find a comparison of interest rates on a second mortgage?

Lending Tree and Quicken loans are two good places to start when doing a comparison of the interest rates on a second mortgage. Mortgage Calculator is also an interesting place to search.

Are equity lines of credits taxable?

Generally, yes. They are no different than second mortgage loans.

When would it be necessary for one to take out a second mortgage?

A second mortgage comes in two forms: home equity and lines of credit. It might be necessary to take out a second mortgage to pay for extensive repairs and remodeling or your home, of if you need a line of credit in a emergency.

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