New Trend: 20-Year Mortgages

While 30-year fixed rate mortgages are still the most popular term for home loans a new trend of 20-year mortgages is gaining momentum and has become a realistic option for borrowers and especially those refinancing. Basically a 20-year loan term is an option to lower ones interest rate and shorten the term of the loan. This of course results in higher month payments than a 30-year, but with interest historically low the 20 year mortgage has actually become an affordable option. MSN Real Estate has taken a full look at this new trend in home loans so click here and check out the full article to make sure you are choosing the right loan term for you.  

No Federal Income Tax Due on Principal Mortgage Debt Forgiveness

Here is an innovative way the government is encouraging home owners to "short sale" their home (rather than be foreclosed upon) and helping keep them out of bankruptcy court.

The IRS has created an exemption from its general rule to treat debt forgiveness as ordinary income. In the past, a lender that reduced the payoff amount on a home would 1099 the Seller for the amount of debt forgiveness. Under the new law, there is no federal income tax due on debt forgiven on a loan that is secured by the Seller's principal residence, provided that the loan was made to acquire, construct, or substantially improve the principal residence.

A refinance of that type of loan also qualifies for the exemption.

Sorry, the rule doesn't apply if you pulled money out of your house to pay for something like a vacation and got debt relief on that loan.

The exemption applies to any portion of loan debt forgiven beginning January 1, 2007 through December 31, 2009. Put another way, it doesn't matter when the loan was made; what matters is when a portion of the debt is forgiven.