Versions of that program might include widespread principal write-downs -- outright reductions in home owners' mortgage balances -- and guarantees to lenders in the event borrowers re-default.
The Obama administration is also likely to institute an immediate ban on all foreclosure actions, possibly for three months, and is certain to enact bankruptcy reform legislation allowing judges to modify mortgage terms to forestall foreclosures.
The classic way for homeowners to increase the value of their house is by remodeling existing rooms or adding on to its current plan.
Some choose to build recreation rooms and studies while others add new appliances, fixtures and cabinets to enliven rooms and make their home more attractive to future buyers.
Updated Jun 06, 2009Let's take this example. In 2000, you bought a condominium for $300,000 and obtained a $240,000 loan. Based on the rapid appreciation in the years after you bought, your unit is now worth $500,000, even if it has lost value recently. You still owe $230,000. You refinance and get a new loan in the amount of $400,000. Your acquisition indebtedness is the amount you owed on your old loan, $230,000. Subject to the third limitation, discussed below, you can deduct the interest only on that amount.
If some of the money you borrow is used to "substantially improve" the home, that also can be counted as acquisition debt. So if you spend $20,000 from your refinancing on a major upgrade, that becomes deductible, for a total of $250,000 in acquisition indebtedness.
If you are thinking about buying a second home, you are not alone. A 1995 survey by the American Resort Development Association found that 60 percent of households surveyed feel they have a likely chance of purchasing a recreational property in the next ten years, a figure that rose 30% from the survey in 1990. The average age for the majority of vacation home buyers ranges from 40-50 years old. Qualifying as the baby boomer generation, this group of second home buyers consists of 80.5 million people out of the U.S. population of more than 260 million. Demand for vacation homes is rising as a result of consumers’ increasing desire to capitalize on low interest rates, low unemployment rates and a strong real estate market offering many viable second home options.
There’s no question about it: Buying a first home is a big financial commitment. In most cases, a home is the largest single purchase an individual or family will make in a lifetime. However, because of the tax advantages afforded to homeowners, buying a home also can be one of the best financial decisions you’ll ever make.
