For most Americans, mortgage interest paid on a home loan is tax-deductible in the year in which it was paid. With advance planning, therefore, homeowners can increase their 2008 tax deductions and limit their tax liability on April 15. The key is to make the January 2009 mortgage payment before the New Year begins. In making the payment in 2008, the payment’s mortgage interest is applied against this year’s tax deductions instead of next year’s. And lest you think you’re paying “in advance”, remember that mortgage interest is paid in arrears; a payment due January 1 accounts for interest that accumulated in December 2008 anyway. Tax planning is a complicated issue and not all homeowners will qualify for mortgage interest tax deductions. Check with your tax professional before making tax planning decisions. If you don’t have an accountant you trust, call or email me anytime; I’m happy to make a recommendation to you.

Business television is abuzz this morning with talk of “four-point-five percent mortgage rates”; the clip above ran on NBC Today. The news stems from a leaked story that the U.S. Treasury will intervene in the mortgage market, lowering rates a full percentage point below their current levels. As cited by every journalist in every publication, however, the story is 100% speculation. Naturally, that doesn’t stop the press from covering it. When hope for homeowners gets spread in this manner, it’s important to remember some facts: The Treasury doesn’t set mortgage rates — Wall Street traders do. Historically, rates are based on the Supply and Demand for mortgage-backed bonds. Treasury intervention doesn’t guarantee low rates. That mortgage rates are up by a half-percent since last week proves it. Zero details about the plan have been confirmed, quoting CNBC. Everything you’ve heard about 4.5 percent rates is a guess at this point. But, perhaps most importantly, nearly every analyst interviewed has expressed […]