Jan 2nd 2008, 12:03

Refinanced Housing Mortgage Tax-free for 3 Years

Bush signs Act protecting families from higher home refinancing payments

It's a great new year for homeowners who are facing high mortgage payments or worse, possible foreclosures. President Bush recently signed a bill called The Mortgage Forgiveness Debt Relief Act of 2007, which will make refinancing your housing loan more affordable.

Under current law, if your house is losing value and your bank or lender forgives a portion of your mortgage, the tax code will treat the amount forgiven as money that can be taxed. Therefore, even if you pay lower mortgage fees, you're still left with higher taxes to pay because the forgiven value is still taxable.

With the Mortgage Forgiveness Debt Relief Act of 2007, you'll also be given a three-year window to pay for your mortgage and not pay for taxes on any debt forgiveness you receive from your lender. This way, you can pay lower mortgage payments without having to face higher taxes.

There are currently two housing refinancing programs that the government has helped put together: the Federal Housing Administration's FHASecure Program and the HOPE Now Alliance.

FHASecure is basically a second chance for borrowers whose loans are current or past due. If you'd like to know more about this government program, you can call FHA at 1-800-CALL-FHA (1-800-225-5432).

HOPE Now Alliance, on the other hand, is a program by a group of lenders, loan servicers, investors, and mortgage counselors who can help you refinance or modify your mortgages to make payment easier. You may visit their site at http://hopenow.com/ or call them through 1-888-995-HOPE.

 

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