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From: king@kestrel.ARPA (Dick King)
Newsgroups: net.invest,net.taxes
Subject: Money from refinancing
Message-ID: <12841@kestrel.ARPA>
Date: Thu, 25-Sep-86 15:30:09 EDT
Article-I.D.: kestrel.12841
Posted: Thu Sep 25 15:30:09 1986
Date-Received: Fri, 26-Sep-86 20:39:47 EDT
Organization: Kestrel Institute, Palo Alto, CA
Lines: 33
Xref: mnetor net.invest:1200 net.taxes:591


   From: gnome@oliveb.UUCP (Gary)
   Newsgroups: net.invest,net.taxes
   Date: 25 Sep 86 00:14:52 GMT
   Distribution: na

   What are the ramifications of "taking money out" when
   refinancing your house?

   It looks like a good way to finance major home improvements
   but I am somewhat leary about the long-term effects.

Under the new law, only the interest on (the sum of the purchase price
of the house and the cost of all improvements) is deductible -- the
residue is not.  Also, points must be deducted as you pay the
mortgage. 

You could therefore "cash out" if you use the money for improvements,
provided your current mortgage doesn't exceed the purchase price.
(This can happen if either you have already refinanced and cashed out
heavily, or if you have a mortgage with heavy negative amortization.)

Quick question for the experts: if your mortgage exceeds the purchase
price because of negative amortization, do they really mean to not
make the excess interest deductible?  Suppose you refinance for more
than the purchase price to get "out from under" a mortgage that has
given you negative amortization in the past?

   HELP!?

   Gary
   (allegra,ihnp4,glacier,hplabs)oliveb!oliven!gnome

-dick