Have you ‘asked our expert’?by Tim Manni
Here is a sampling of a few recent “Ask the Expert” questions and their answers:
Q: Will biweekly mortgage payments save me money?
A: Making biweekly payments on your mortgage will absolutely cut your interest cost and shorten the term of your loan, to boot. Usually done though an auto-debit arrangement from an account you specify, the mortgage lender will sweep though that account every two weeks and collect exactly half of your required monthly payment.
While there are only 12 months per year, there are actually 26 two-week periods. This means you are essentially making 13 monthly payments per year. In today’s market, and if started from the first monthly payment, this reduces the term of a 30-year loan to about 25 years, saving you a bundle in interest costs.
Q: We just sold our house, when do we have to pay the IRS?
A: Capital gains taxes as they apply to your principal residence can be found in IRS Publication 523.
If you have lived in your home for two of the five years leading up to the date of sale, you are exempt from taxes on capital gains realized by the sale of the home. There are limits, though, of $250,000 in gains for a single filer and $500,000 for a joint return.
You can only exclude gains from the sale of a home every two years — that is, if you sold a home last year and excluded the gains from tax, you cannot exclude the gains made on this house. You would have to wait at least another year before this home becomes eligible to be excluded.
Publication 523 has worksheets and tips to help you figure out your basis cost and what your gains actually will amount to once you’ve subtracted selling costs, certain improvements and more.
Q: I’m eligible for HARP, but my servicer doesn’t participate. What can I do?
A: Not all lenders/servicers participate in the HARP program, which is voluntary. If your loan is owned or backed by Fannie Mae or Freddie Mac and your servicer doesn’t participate, you are free to go to another lender who is active in the program.
Among the items which make your loan eligible for a HARP refinance are:
- Your mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009
- Your mortgage hasn’t already been refinanced through HARP, “unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009”
- Your loan-to-value ratio must be greater than 80 percent
- You have to be current on your mortgage
Be sure to check out our Ask the Expert page where you can read all the questions we’ve answered or submit one yourself.