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WIKI ANALYSIS
Mortgage debt is debt created by the money owed following the sale of a property or other mortgage asset.
While a mortgage in itself is not a debt, it is the security for the loan that the lender makes to the borrower.
Getting out of Mortgage Debt
- Plan Before You Buy
- Think about how much you can afford before you purchase a new home or piece of property. Use a rent versus buy mortgage calculator[1] to determine if buying a piece of property makes the most financial sense
- Pay attention to the terms of different contracts.
- While adjustable-rate mortgages offer lower initial payments when interest rates rise, some homeowners are caught unprepared.
- Fixed rate mortgages have slightly higher interest rates to start, but do not change over time
- Pay Off a Mortgage
- Some mortgage plans offer a bimonthly payment schedule, which results in one extra payment per year.
- Keep an eye on interest rates and, if they fall, consider refinancing. Refinancing can shorten the interest rate or term of a loan.
Mortgage Forgiveness Debt Relief Act of 2007
The Mortgage Forgiveness Debt Relief Act of 2007, signed into law on September 1 2007[2] , will help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages. This Act was passed to shore up the U.S. Housing Market in light of the mortgage market meltdown. It creates a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. Under current law, if the value of a home declines, and the bank or lender forgives a portion of the mortgage, the tax code treats the amount forgiven as income that can be taxed.
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