Tax Advice: Middle Class Tax Shelters Everyone Can Use, Many Don"t

Tax Advice: Middle Class Tax Shelters Everyone Can Use, Many Don’t

By: National Association of Responsible Lending and Investment

Many people lose money for years to landlords because they mistakenly believe they cannot afford to buy a home. However, in most cases, these renters are where they are only because they are unaware of all their other options. Most people know that it's better to put your money into a house that you own than into a rent check you never see again. Some are aware that mortgage payments could actually be fairly close to what they currently pay in rent.

What few people realize are the tax benefits stemming from owning a home can actually save them hundreds of dollars each month. After taking into account these additional savings, which would you choose: giving up a large chunk of your paycheck each month to a landlord for a small apartment, or, for significantly less money, having not just your own home, but also the freedom to take your money out again in the future?

How Tax Benefits Work

Tax benefits from home ownership come in the form of deductions. Come tax time, the amount of money you spent on tax-deductible expenses related to your home financing (many of which are outlined below) is subtracted from the total amount of taxes you owe. Depending on how much you owe and how much you put into your home over the course of a year, home financing could actually result in zero tax liability. That means that your new home may actually bring you a refund check!

For example, assume you owe $12,000 in taxes for the past year, and your mortgage payment is $1,000 per month. In the early years of a mortgage, payments are usually almost entirely for the interest you owe on your home loan. Mortgage interest payments are tax-deductible, so from this one deduction alone, you now owe $12,000 less in taxes—which brings the total amount you owe the government to zero. If your employer withholds taxes from your paycheck, you will receive a refund check for the tax you overpaid.

Tax Benefits for All Mortgages

- If you own property, then you pay property taxes. These are always fully tax-deductible.

- Points on a home mortgage are fully deductible.

Tax Benefits for New Mortgages

- As mentioned earlier, the payments you make in the early years of a home financing loan generally go straight to interest. The principal, or actual amount of the original loan does not start to go down until later in the loan period. This means that early on, you can deduct most, if not all, of an entire year of mortgage payments.

- Both late and early payment fees charged by your lender are considered interest and can be deducted.

- Many tax benefits available in the first year of your mortgage are not available later on. It is always a good idea to go over your situation with an accountant to be sure you do not miss any opportunities for savings. These first-year tax benefits include moving expenses and capital gains.

Tax Benefits for Refinancing a Current Mortgage

- If you are refinancing in order to make improvements to your property, then the interest is deductible. Anything that could reasonably improve your property value—from fixing the driveway to adding on an entire new story—counts.

- Interest on refinanced mortgages that are taken out for expenses not related to home improvement can also be taken as a deduction, but only within certain guidelines. Currently, the maximum deduction for the life of the loan is $100,000. (Married couples filing separately each have a maximum of $50,000.)

- Points on a refinanced home mortgage are still tax-deductible in most cases.

Benefits Beyond Tax Savings

No one would complain over having a few extra dollars in their pocket. Not only can financing your home save money on your next tax return, but it can also save money on purchases made using money received from refinancing a mortgage (or simply money not lost to rent). In fact, paying off credit cards after financing can be one of the smartest financial moves you can ever make—especially if you keep those cards paid off.

Consider that even the worst mortgage interest rates can be at least ten or twenty percentage points lower than those for the average credit card. People with poor credit are often better off with a higher mortgage interest rate if it means their other debt can be reduced, thereby bringing their credit score up. After re-establishing their credit, they can then refinance their home at a better interest rate.

Individuals everywhere, looking to get out of debt and begin investing can turn to the debt aide organization National Association of Responsible Lending and Investment at http://www.NARCLI.org. You may reach debt relief and investment experts via email to Question@NARCLI.org.

The Advantages of A Secured Online Loan

As our Internet usage continues to grow people have a greater opportunity of using online means to get what they want. This article will examine the various advantages of applying for a secured online loan using the Internet.

The tremendous extra security that comes from online technology is always a good reason to purchase or make other transactions online, and this is as true for applying for your secured online loan as anything else. I know that a lot of people are suspicious of ordering products or services on the Internet, but this is a groundless fear. There is a thing called encryption which disguises all data that you enter on your PC and keeps it disguised until it arrives at its destination. Only then is the data revealed. Look out for a protocol called SSL (secure socket layer), as this is considered to be the best type of encryption. Also you can look out for the little padlock icon on your toolbar or on the web page itself, depending on your operating system.

The costs and overheads of an online business is always significantly lower than that of a traditional brick and mortar business, so in theory the online business can pass their savings onto you the customer. If there are lots of suppliers competing in the same market then this usually means that prices are lowered as businesses vie for customers. Great for the rest of us!

Online transactions are always quick. They are over very quickly; you can make the application for your secured online loan and you can get back to what you were doing in only a few minutes.

When you apply for your secured online loan it makes sense to make the application online as you are looking directly at the data you enter into the application form which of course takes the form of little data entry boxes. An obvious advantage is that if you make an error, or enter something that the system does not understand, it will alert you then and there. You won't have to wait hours or days down the line to get a message that your application has been unsuccessful.

Online application forms are easy to use because you can actually see what you are entering into the boxes when applying for your secured online loan and you can alter things easily. This beats talking on the phone to someone working in a call centre somewhere whose first language may not be English. How many times in the past have we all had to do simple things like spell out our names because the person we were talking to just didn't understand what we were saying? How much more dangerous can that be when we are talking to that person about such important things as our finances or our credit rating!

The bank or loan supplier can usually process your application for a secured online loan quicker if you make the application online. This is because the application can automatically be routed to the correct department or person.

Good luck in the hunt for your secured online loan. It should only be a short journey.

Gordon Goodfellow's sites provide answers to everyday problems. See his Secured Bad Credit Loans site for secured bad credit loans, and also the secured online loans UK page.

What is a Reverse Mortgage?

What is a Reverse Mortgage?

Reverse mortgages or becoming more readily available and popular as a financing option. These mortgages are generally used by older people who have accumulated a substantial amount of equity in their home. Most lenders require the borrower to be at least 62 years of age. Reverse mortgages are a good way for them to subsidize their retirement income.

The way a reverse mortgage works is by the lender making payments to you based on the value of the equity in your home as opposed to you making payments to a lender with a traditional mortgage. Taxes and interest are added to the amount that needs repaid, decreasing the equity in the home. The lender gets their money after the house is sold or when the owner dies.

Most reverse mortgages do not have to be repaid for a long time and some not at all, as long as you continue to live in the property. The amount you are loaned is based on your age, the value of your home and the current interest rates.

Your loan is usually disbursed in one of the following ways:

* A lump sum that is given to you or used to pay off debt or a combination of the two.

* Fixed monthly payments that will be made to you for a set period of time.

* Fixed monthly payments that will be made to you as long as you live in the home. These payments will be smaller than the ones in the previous option.

* As a line of credit.

* As a combination of a credit line and one of the payment options.

Some potential drawbacks of reverse mortgages are:

* You can only use your equity once. If you use it to live on and have an emergency later it will not be there.

* There can be substantial fees involved with reverse mortgages. There may be upfront fees as high as $5000 dollars. It is wise to do some comparative shopping when it comes to this type of financing.

* Your payment amount may not meet your needs. How much good will $100 a month do you if it is going to cost you the equity in your home?

* Your ability to receive government pay outs such as SSI and Medicaid may be affected.

* Make sure your lender is reputable. The names of reputable lenders can be gotten from the Department of Housing Urban Development.

* Upon death, if repayment has not been made, your home will go to the lender. This may not necessarily be a bad thing, but it is something to consider.

These are a few of the facts about reverse mortgages. These mortgages can be a big help if you need money later on in life, but they also come at a price. Only you can decide, based on your situation, if that price is worth paying.

Marjorie Salada is the owner of debtmanagement1.com, a website that contains information on debt consolidation, debt settlement, debt counseling and how to manage credit card debt.

Debt management, debt settlement, debt counseling, debt consolidation and credit card debt, reverse mortgage

The article explains what a reverse mortgage and some the advantages and disadvantages associated with reverse mortgages.

Marjorie Salada is the owner of http://www.debtmanagement1.com, a website that contains information on debt consolidation, debt settlement, debt counseling and how to manage credit card debt.

Tips for Getting a Personal Loan Fast and Hassle-free

SUMMARY:

When searching for a personal loan it’s usually advisable to take the time to search for lenders, request loan quotes from them and compare their offers in order to decide which lender has the right loan for you. This process however takes a lot of time and is very stressful. So if you are planning to search for a personal loan you might as well be prepared for what it takes.

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Finding the best deal

Your aim will of course be to find the lender offering the lowest interest rate and the most flexible repayment schedule so you’ll get the lowest monthly payments possible.
There are Secured and unsecured personal loans. If you choose to go for a secured loan you’ll probably get lower interest rates, larger loan amounts and longer repayment programs. But remember, if you don’t need that much money don’t take all the money the lenders are offering. You can always borrow money later; you should keep your debt to a minimum.

Take advantage of online services

Once you’ve decided how much money you need, it’s time to start your research. Looking for potential lenders hasn’t have to be such a nuisance. There are many online sites that offer access to a wide list of lenders that will present you with loan offers and you’ll be able to choose which one best suits your needs after comparing them from the comfort of your home.
Pay special attention to interest rate (APR), repayment schedules, loan amounts, and also whether there are extra fees or not that may turn an otherwise good looking deal into a big burden.

Another Benefit

A Personal loan can serve any personal purpose; you can use it to pay for medical bills, going on vacations, making home improvements, and more. But there is another benefit that comes when you secure a personal loan and regularly pay the monthly installments. This benefit, as important as it is, is usually disregarded. Paying back a personal loan will increase your credit score and improve your credit history, thus, the next time you request a loan you’ll end up paying a lower interest rate and you’ll be able to request a higher loan amount.

AUTHOR:
Mary Ann Wise, a professional consultant with more than twenty years in the financial field, is currently committed to helping people in the process of securing personal loans, mortgage, refinance or consolidation loans and preventing consumers from falling into the hands of fraudulent lenders. In one of her websites: http://www.badcreditloanservices.com you will find more useful tips and interesting articles on this subject and other financial related topics.

RESOURCES:
http://www.badcreditloanservices.com

Debt Secrets Credit Counseling Companies Don"t Want You To Know

Debt Secrets Credit Counseling Companies Don’t Want You To Know
By National Association of Responsible Lending and Investment

Most people don't know it, but a bad or shady debt reduction company can actually land you in a worse spot financially than you were in the beginning. In fact, in many cases filing bankruptcy is preferable to working with a credit counseling company. Given the amount of confusing information out there, it is critical that you arm yourself with the truth about these businesses.

WARNING: Credit Counseling Isn't Always What It Appears

When you first start out, you go over all your debts with a counselor. They contact each of your creditors to lower your interest rates, which lower your payments. Together, you develop a strict budget. They hold you to this budget by asking for one lump payment from you each month, which they then use to pay your bills on your behalf.

Unfortunately, this sunny scenario hides the real truth. Yes, for a fee, credit counselors will ask your credit card companies to lower your interest rates—but you can do that yourself. Yes, for a fee, they will help you develop a budget—but you can do that yourself. Yes, for a fee, they will take one large payment from you each month and use it to pay some of your bills—but you can do that yourself, too. In fact, you can do it better.

When you're in debt, the last thing you need is a credit counseling agency charging you high monthly fees for performing tasks that you can do yourself for free. Otherwise, any savings from lower interest rates is quickly lost in new fees for your credit counselor. Does that sound like good financial advice?

Driven By Client Successes, Or By Personal Profits?

Years ago, a small number of newly created credit counselors actually made a positive difference in the lives of their clients. Before the industry exploded, many credit card companies considered professional credit counselor to be a step in the right direction. Creditors were willing to lower interest rates and make other compromises to help customers in counseling to get back on track.

No longer. Sadly, today's credit counseling companies exist to create profits for their owners—not to help customers get out of debt. In fact, some debt reduction companies are not actually dedicated to helping consumers with debt management plans at all; rather, they serve as fronts for bankruptcy attorneys or home equity mortgage brokers.

Don't be misled into believing that a non-profit credit counselor is better than a for-profit one. In fact, recent federal investigations have revealed that many of these non-profit companies are actually owned by the same people who own their for-profit "competitors."

The credit counseling industry is unregulated, meaning there is no set of central standards that companies must follow. Once the shady credit services opened their doors, the credit card companies closed theirs. In fact, it is now harder than ever to get credit card interest rates lowered. Credit counselors, not credit card users, are to blame for this situation.

It All Adds Up… To Even Higher Bills

Specific debt consolidation companies have specific guidelines as to what their clients are and are not allowed to do. For example, some companies do not allow you to open any new credit accounts under any circumstances. If the family car finally breaks down, you may not be allowed to get a new vehicle. The average debt reduction plan lasts at least three years — that equals at least three years of your life, where total strangers restrict your every expense.

Whether or not you can take out a new car loan may be the least of your concerns after hiring a credit-counseling agency. Consider how important it is to pay your credit card bills on time. Multiple late payments hurt your credit score, which means even higher interest rates on a future mortgage or student loan. What guarantee do you have that your counselor is paying attention to your due dates? Many of these businesses have been exposed for repeatedly paying bills months late. Their innocent clients never knew until it was too late.

Then there is the matter of simple math. Shockingly, the monthly payment you make to your credit counseling company may not even be covering your total minimum payments. After the counselors subtract their own hefty fees, they then pay your bills at their discretion. Some cards could remain unpaid for months as most of your money is put on another card.

At best, this means a lower credit rating and multiple late fees; at worst, it means legal action against you and worse credit than you had originally. It would have been faster, easier, and much cheaper to file bankruptcy instead.

Dealing with debt can be stressful, but turning such an important aspect of our lives over to people we do not know is a big risk. It's great to get outside help, but not if it costs you hundreds or even thousands of dollars that would be better spent on paying off your current balances.


Individuals everywhere, looking to get out of debt and begin investing can turn to the debt aide organization National Association of Responsible Lending and Investment at http://www.NARCLI.org

You may reach debt relief and investment experts via email to Question@NARCLI.org.