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interest-rates-headlineIf you haven’t noticed, mortgage rates are at a new low. But does that mean our economy is at a new low or is it on the rise?  Probably both, I really don’t know.

It kind of sucks because people have been hearing “record low interest rates” or “lowest rates in 30 years” for a while now but those are only sales terms.. They finally have a new connotation. Rates really are at a new low which explains why mortgage applications have shot up to a record 5 year high.. thats back in 2003. 80% of that rise in applications are Refinances. Rates have dropped because of The Federal Reserves pledge of billions of dollars just one month ago.

For people with REALLY poor credit… example.. you haven’t paid your mortgage/bills in over 3 months. Anything over 600 credit score is kosher for a new interest rate around 5.18% … This is real.. 5.18% is very low. The lowest Freddie mac has recorded since 1971.

But say you have ok credit.. and you have some equity in your house. The 30 year fixed rate is at 5.18%.. cheap money right? You can pick up a 15 year extension on your mortgage, Cash out with a rate of 4.92%..

Even 5 year Adjustable rates are low.. around 5.49%

I would say all of these low rates is going to be the stick of dynamite needed to break up the clogged log fluke and bring home sales back up from the free fall it was in.  It might be able to stir up our economy too with all the homeowners cashing out.

So if your in New Jersey and you are wondering what to do because you’re short on money and you just spent a good portion of your reserves on christmas presents, give us a call. See what we can do for you over at Ford Financial!

MERRY CHRISTMAS, HAPPY HANNUKAH, And A GREAT KWANZA

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Early mortgage payment could cut tax bill
Friday December 19, 6:00 am ET
Kay Bell

A little year-end attention to your mortgage could lower your upcoming Internal Revenue Service bill.

Unlike rent, which you pay beforehand (i.e., your Jan. 1 bill covers your stay in the rental unit for that coming month), your mortgage payments are made at the end of your occupancy period. That means your Jan. 1 mortgage statement represents interest for the month of December, making it a tax-break-eligible bill for this year.

By accelerating that payment even by just a day (Dec. 31, if your financial institution is open for business then), you get an additional deduction for the interest paid.

Don’t get greedy, though. You can’t make your February, or any other upcoming mortgage payment, early to boost your year-end deduction amounts. Tax law generally prohibits write-offs for prepaid interest (there is an exception for loan points in some cases). Each year, you can deduct only that home mortgage interest for that year.

You also want to make sure you don’t cut it too close in making the early payment. Get the check in the mail in plenty of time for it to arrive at your lender by year’s end. If you pay online, be sure you make the electronic transaction in time to have it credited to your 2007 payment amount.

That way the added interest will show up on the annual statement (usually a Form 1098 or an IRS-acceptable substitute) you’ll get from your lender in late January, detailing your deductible mortgage activity.

Timing your payment
Some tax professionals say you can simply make your extra mortgage payment late this month with a check dated Dec. 31 and count it toward your deductions.

However, if you actually get your payment to the bank by the last business day of the year, which happens to be Monday, the 31st this year, or a weekday or two early, the extra interest will show up on the lender’s official paperwork. And that means no curious tax examiner will question any difference between the amount you claim on your Schedule A and what your lender reported (and copied to the IRS) on the 1098 form.

If your year-end mortgage statement doesn’t reflect the extra payment’s interest, go ahead and deduct the correct amount on your tax return and attach a statement explaining why your number, not the lender’s, is accurate.

If your mortgage holder pays your annual property tax bill from an escrow account, that also will be listed as a deductible home-related expense on your Form 1098. But if you, not your lender, pay your property tax bill, and it’s due early next year, consider paying it in December, too. As with your mortgage interest, this payment — and deduction — will be shifted into this tax year.

When shifting deductions doesn’t pay
A word — actually, three words — of warning about accelerating some tax payments: alternative minimum tax. This parallel tax system was devised almost 40 years ago to guarantee that wealthy filers paid their fair share to the IRS. But nowadays, more middle-class filers are finding the AMT applies to them, in large part because the alternate system isn’t designed to keep up with inflation.

The latest count: Around 4 million taxpayers, mostly middle-income families in high-tax states such as New York and California, now pay the tax. The projection for 2007 returns if the system isn’t changed: 23 million new AMT victims.

There are a couple of reasons so many taxpayers now potentially face the AMT. First, the parallel tax system isn’t indexed for inflation. Without that annual adjustment, regular income increases have pushed many filers close to or into the earnings level where the AMT kicks in.

Currently, the 2007 AMT income exclusions are $45,000 for married taxpayers filing a joint return; $33,750 for single or head of household taxpayers; and $22,500 for a married taxpayer filing a separate return. Congress is working on legislation to increase those amounts more along the lines of the 2006 figures ($62,550 for married filing jointly; $42,500 for single or head of household; $31,275 for married filing separately).

Secondly, under the AMT, some usually acceptable tax breaks aren’t allowed. Mortgage interest on your main and second home is still AMT-deductible, but home equity loan interest could be disallowed. And real estate and personal property taxes aren’t deductible under the AMT. So before you shift payment of those taxes into this year, make sure you won’t face an AMT bill where the write-offs won’t be of any tax use.

Also be careful about accelerating deductions if you’ve earned a lot this year.

Taxpayers with adjusted gross incomes of more than $150,500 ($75,250 if married and filing separately) could find their itemized deductions amount reduced. There’s a work sheet in the Form 1040 instruction booklet to help you determine if you’ll face the deduction limitation. If you do, it makes no sense to pull deductions you won’t be able to fully use into this tax year.

And remember: While an early payment will give you 13 mortgage interest amounts to deduct this year, it means that on your 2008 taxes you’ll only have 11 (or 12 if you pay a little early next December, too). So before you send off that check, make sure you really need the added deduction amount on this coming return.

600px-us-federalreservesystem-seal1With the Implosion of the mortgage market. Unfortunately we had to slow up and focus more attention on other areas of the business EXCLUDING this blog!! Wellll on that note things have picked up a bit and rates are at a CRAZY low. NOW is the oppurtunity for everyone to refinance. The Fed (short for federal reserve.. aka the people that print off our money)  cut mortgage rates because of the poor state of our economy.

What happens is the federal reserve lends money that they print off and charge an interest rate to banks. The banks then charge an interest rate on that money to us, the consumer. The “prime” rate is the rate directly influenced by the federal reserve and is usually 3 percentage points higher.  The fed rate is down to about .25% which translates a prime rate of about 3.25%. This is extremely low causing mortgage rates to drop to the low 5 percentage, even as low as 4.75%.

Call us to talk about how low we can get your current rate. This is cheap money. The only tough part is that the credit crunch is still effecting many and shaky credit may not get the same low rates.

here is a relative article