Lower The Rate Deduct The Interest

Dated: 04/10/2017

Views: 46

Credit card debt in America is back to levels prior to the recession. The average credit card APR is just under 16% according to CreditCards.com Weekly Credit Card Report.  

33967393-250.jpg

Homeowners have an advantage over renters when it comes to getting their arms around debt issues.

Basic money management suggests that higher rate debt be replaced with lower rate debt. Credit cards, personal cars, boats, motor vehicles and other personal property, typically have interest rates higher than that of real estate loans.

Borrowing against a person’s home usually provides the lowest rate of financing. Refinancing a home mortgage to take cash out to retire personal debt is one option. Another would be to secure a home equity or HELOC, home equity line of credit.

An alternative advantage of borrowing against one’s home is that the interest may be tax deductible unlike the interest on most personal debt. Qualified mortgage interest includes acquisition debt which can only be used to buy, build or improve a principal residence and up to $100,000 of home equity debt which can be used for any purpose.

Managing money is a critical life skill that people need to master. While the goal may be to become debt-free, paying the least amount of interest possible can be a good first step. Owning a home provides an asset that allows for options not available to tenants. Seek professional advice to determine your best course of action.

Blog author image

Ana Festa

“My mission is to develop long-term client relationships by providing the most professional, informative, loyal and dedicated service in the real estate industry.” As a full service real estate....

Latest Blog Posts

Pros and Cons of Smart Appliances

Smart appliances can make life easier and more convenient. Since the technology is relatively new, many manufacturers are still working out problems and resolving glitches. Before you purchase a

Read More

Which Home Improvements Offer the Best Return on Investment?

Remodeling your house can be a major investment. Depending on the type of project you choose, you could spend up to tens of thousands of dollars. You want to know that you’re making a wise

Read More

Changes to Real Estate Tax Deductions for 2018 from Bridget Morrissey

As a homeowner, or soon to be homeowner, you can get some pretty sweet tax deductions from things related to your home. Some tend to change from year to year, like those for energy-efficient

Read More

Mystic Real Estate Market Report September 2018 by Bridget Morrissey

The Mystic Real Estate Market Report is a monthly statement of the average sales price for and number of  2 BR, 3 BR and 4 BR homes sold, the total number of sales, the number of active homes

Read More