How does one mortgage a property that is already completely paid for?
January 22, 2013 in mortgage by jedwan
I’d like to buy a vacation trailer and although I can get a homeowner’s load on my property I’d like to get the mortgage interest tax benefits, which you don;’t get on a homeowner loan.
Can I mortgage a property for less than its total value?
In response to the first posting, I live in New York state and our tax guy said we cannot write off home equity loan interest.
I’m not sure where you live but in the US, whether it is a mortgage or home equity loan, the interest is deductible.
You may want to check into that further before trying to get a mortgage. Really, the only difference between a mortgage and a home equity loan is that usually, the mortgage is so you can purchase the house. Call your bank and ask to speak to someone about home equity loans. I’m fairly certain that is the kind of loan you want.
Good luck.
Simple – you apply for a mortgage loan with a lender.
You’ll have to obtain a home equity loan. Mortgages are purchase money loans. And I’m pretty sure your tax guy is incorrect. It’s federal tax filing so it shouldn’t affect just NY. Talk to your banker for more details.
Here is what the IRS says:
http://www.irs.gov/publications/p936/ar02.html#d0e2135
Look at the Home Equity rules. You can only take a mortgage out for less than the property is worth.
What makes the most sense in terms of what it costs and the rates available will dictate whether you do a new fixed rate first mortgage or perhaps a home equity line of credit or a fixed rate 2nd mortgage.
Good luck with your plans to purchase the trailer.