Even if your house has doubled in value, you may not owe federal taxes when
you sell.
Federal tax law allows qualified married couples to exclude up to $500,000 in profit ($250,000 for singles) from federal capital gains taxes on the sale of a primary residence. So unless your profit is over $500,000 and you qualify, you owe nothing to Uncle Sam. Laws change from time to time. Please check with your financial person.
Two mortgages are cheaper than one if you have only 5% to 10% to put down.
Private mortgage insurance (PMI) makes it possible to put less than 20% down, but adds to your monthly mortgage payment. An alternative that will actually cost you less each month is to take out two mortgages - a mortgage for 80% and a 2nd mortgage for the rest of the amout that you need to finance (certain qualifications apply). An added bonus is that the interest payments on the 2nd mortgage may be tax-deductible, while PMI payments are not.
Choosing a Realtor based on your friend's recommendation may be a risky proposition.
A friend's Realtor won't necessarily be the "right fit" for you. You're putting a major financial asset -- maybe your biggest -- in that agent's hands. Interviewing agents gives you the opportunity to find the one you feel comfortable with and who makes you feel confident that you'll get the results you want.
Four items you should have readily available.
Getting a mortgage decision nowadays is amazingly quick and easy. Here are a few items that are typically required:
1. Current paycheck stub for proof of income
2. List of debts
3. List of assets
4. Employment history
Mortgage interest on a vacation home can be tax deductible, if you don't rent it.
Wondering if you can afford a weekend/vacation home?
Well, you may be able to factor in a nice federal tax savings. As with your primary home, the mortgage interest is likely deductible, provided you don't rent it out for more than 14 days/year. Depending on your income, federal tax law now allows mortgage interest deductions on up to one million dollars in mortgage debt on two personal residences. Property taxes may be deductible as well. Always consult with a financial expert before making a decision.
Paying "points" can lower your mortgage interest rate.
If you'd like to get a lower mortgage rate, consider paying "points." A one-time-charge, usually paid at closing, each "point" equals 1% of the mortgage amount, or $2000 on a $200,000 loan. The lower rate will reduce your monthly mortgage payments, and points paid in conjunction with the purchase of a home may be tax-deductible in the year they're paid (see a tax advisor). Monthly savings will often exceed what you paid in points in just a few years' time.
Always consult a professional when making a decision.
All information stated here is subject to errors and omissions.