Your Questions About Check My Mortgage Interest

Sandy asks…

Can you claim the interest on a mortgage that is NOT in your name but you make all the payments?

Basically, an in-law used their credit to get the loan for the home because my credit was not good enough.The in-law makes no payments and every payment made is by check with my name and info on it.

admin answers:

Nope you can’t claim it. It’s not in your name.

Steven asks…

Whats the best way to modify my mortgage interest rate?

I bought my home about 2 years ago at 7.125%. I had (and still have) excellent credit, but the reason my rate was high is because I went with a stated, no doc loan. That means I didn’t show any tax returns to get my loan (they just needed my ID, bank statements, assets, and credit check). Nowadays, stated and no doc loans do not exist anymore (for good reason). It’s so tempting to refinance now with the rates being so low. But, I can’t. There’s lots of banks offering hardship programs now that will lower/modify your interest rate without refinancing (and I am experiencing some hardship due to the economy), but I would like to know if there are any other options. The bank is Citibank. Does anyone else have this same issue? Should I hire an attorney who specializes in loan modifications? If so, what should I look out for? Thanks in advance.
I forgot to mention that I did apply for the hardship assistance program that my bank is offering, but I was rejected because I was not in enough financial trouble. The rep even hinted that I should pay my next mortgage payment a week late to make it seem like I’m having problems. I really dont want to do that. I just want to lower my rate a little bit and have some extra money to save each month. Thats it.
Ok, I can’t refinance based on their requirements, thats the whole point of my question. I want to modify my loan. Refinancing is not an option. If ya don’t have an answer, then moooove along. Thanks!

admin answers:

Can you not refinance because of your tax returns? Because on your tax returns it will show you make a lot less than what you were stating 2 years ago? If that is the case, I can see why you can’t just do the straight up refi like normal everyday folk. ( I am self employed and really had to jump through hoops to get a loan last November )

If you do go the lawyer or modification company route, make sure they do not charge you an up front loan fee. That is a sure sign of a scam.

The only way you will probably get to modify your loan is by doing what you don’t want to do: get behind on your mortgage.

What exactly are the requirements you cannot meet to refi?

William asks…

Unmarried (but engaged) owners of a house/mortgage interest question?

My gf and I bought a house last year and we both wrote montly checks to the lender (although my payments are much larger than my gf’s). Both our names are on the deed and the loan. Only my name and SSN is on the 1098 mortgage interest statement. Basically I wanted to be the traditional male provider and make all of the house payments myself, but she writes checks to the lender to give us a budget buffer between paychecks. I basically pay her back her payment by buying all of the groceries and paying all of the utilities.

I plan to claim all of the mortgage interest on my taxes and she plans to claim none. The only question that I could see the IRS asking is: Why did she write checks to the lenders every month? As I said, I pay her back (we didn’t want a case where I made the full payment each month and then she gave me money directly because I’d have to report that as income, wouldn’t I?).

Can I claim all of the mortgage interest legally?
Someone asked how the IRS would know who pays what: If we were audited, wouldn’t we have to show canceled checks, etc., to show who made the house payments?

I can “prove” that I paid almost 70% of the mortgage, but I’m not so sure how I’ll prove that I reimbursed my co-owner by paying for all the groceries and utilities. It’s a gray area which is why I’m unsure of the legality of claiming all of the mortgage interest on just my taxes.

If I didn’t reimburse my co-owner based on our mutual agreement, I would guess that legally I wouldn’t be able to claim all of the mortgage interest since our bank statements would show that I didn’t pay 100% of the payments.
What if I could show based on grocery receipts, etc., that she was reimbursed for her mortgage payments?

Could we say that her payments were towards the principle and my payments were towards the interest?

If I had paid the entire mortgage and she had paid me, would I have had to claim that as income?

Thanks!

admin answers:

How would they know who pays what?

Sharon asks…

We are closing on our refinance Wed. The original mortgage company is charging $800 interest?

This is a little over 2 weeks interest. Is this normal? The current principal balance is $112,500. We had to make a mortgage payment by the 3rd and because it was then 113,700 (4 or 5 days ago) when the new mortgage company called the original mortgage company says they will refund us that $1,200 within 30 days of the closing which is fine. My question is they are asking as the payoff amount of $114,500 which includes $800 interest which would be about 16 days interest for them to process/cash the check after the closing? (Obviously I don’t think it will take them 16 days to cash a check!) Is that typical procedure? I have absolutely no idea.
The $800 I understand is about 99% interest I don’t have a problem with that. My question is more the length calculated: about 16 days worth of interest from the closing and signing/ refinancing with another mortgage company. Would a mortgage company really take 16 days to cash a check? Doesn’t seem likely. But of course if that is standard operating procedure I will live with it of course!

admin answers:

It’s common to issue a payoff that is a couple weeks further out than when the refinance might actually close.

They CAN NOT keep the extra money. You will receive a refund of any unearned interest (which stops the day they receive their payoff funds), generally 2-3 weeks after closing.

Most title companies will purposely overfund the payoff by 5-7 days, just to make sure that, if for any reason the receipt of those funds is delayed, that there is sufficient funds to fully satisfy the loan. If you’re short, they simply refuse the entire amount and you lose even more days of interest getting it corrected.

If you had an escrow account, you’ll likely have a refund of whatever funds were in that account as well. They take 2-3 weeks on average to process their payoff, and settle out your loan and escrow accounts, after which time you’ll get your balance back by mail.

David asks…

Co-borrowed on mortgage; other borrower in higher tax bracket. How to make sure he takes 100% of deduction?

My boyfriend and I just bought a condo; we co-borrowed on the mortgage. We’ll be filing taxes separately. He’s in a higher tax bracket, so it would make sense for him to take the entire mortgage interest deduction since he will get more back than I would. How do we make sure that can happen?

I have heard different things about what we should do. For example, I have heard that the paper trail for the mortgage payment should always be traceable back to him and him alone (e.g., the checks should come from an account that only has his name attached to it). I have also heard that we can take that route, but that I can actually pay the principal amount out of my funds so long as he pays the interest amount out of his funds. And I have heard that we don’t have to go through any of this trouble; that as long we don’t both try to take the entire interest deduction, it’s fine however we split it.

Does anyone know for sure? Is there a source with a definitive answer?

admin answers:

If you’re both on the loan you can split it any way you wish. If his SSN is on the Form 1098 from the mortgage company, no further action on either of your parts is required. If you are splitting the payments, give him your share and let him cut the check for the payment.

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