Home Mortgage Refinancing Plan of Obama Seems Uncertain
President Barack Obama assures homeowners with his administration’s home mortgage refinancing program. However, even as he says that the new program translates to a tax cut, it is still dependent on some factors.
Although refinancing may equate to a tax cut, this may not always be the case. President Obama released a statement on his third press conference that the home mortgage refinance programs released by the administration has already helped a significant number of homeowners who have availed of the programs. He further added that the refinance plan is equal to a tax cut.
However, experts and tax analysts said to FOXNews.com that low home mortgage rates would reduce tax savings. According to Gil Charney, a Tax Institute analyst, even if there can be savings through refinancing and low monthly payments, lower tax benefits can also happen, as homeowners now have less tax obligations. He also added that home mortgage refinancing could lengthen the term of a home mortgage, something that might not be really favorable to a person who wants to pay off their mortgage as soon as possible.
According to Mark Steber, Jackson Hewitt Tax Service’s vice president for tax resources, even if there are generally no tax advantages when a person refinances to a lower interest rate, one can save on the total cash that they have to shell out. He adds that even tough a taxbill would increase after home mortgage refinancing, the tax increase can even be less than 50 percent of the total difference in interest paid, and a person can have more net savings.
In a photo op last month, President Obama urged people to get a mortgage refinance. According to him, this is a very good season for people to take advantage of the government’s program. However, the President failed to say that not like the housing boom then, borrowers who have strong credit scores and those who have stable sources of income would be the ones who can save on the home mortgage refinancing program.
The housing boom led to the financial crisis that the country is in right now, and the housing industry is also the one that is suffering the hardest blow. The government’s home mortgage refinancing program can work for some people, but it has also loopholes that make it a move that is unwise for a lot of homeowners. There are different factors and different scenarios that should be considered before deciding to refinance.
