What are the limits to mortgage interest deduction?

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My wife and I current do not owe a mortgage on our house (~$ 600K). I am considering getting a ($ 400K) home equity loan / mortgage. Our income would easily support the monthly payment. My questions are 1. Will the interest from the $ 400K loan be tax deductible or is interest on cash-out loans over $ 100K not eligible for deduction (I’ve heard)? 2. Will points on this load also be deductible? Thanks.

I have a credit score of about 680 and lived there for 15 years . I owe 185k and the house is worth 410. I am over 15k in credit card debt and had two late payments. I am also retired and on a penison and social security

  1. Reply
    ang l
    January 27, 2011 at 9:30 pm

    it depends on what you are using the money for. if you are going on a vacation, no. if you are fixing up your house, yes.

  2. Reply
    January 27, 2011 at 10:17 pm

    Mine took about 48 hours with eloan.com.

  3. Reply
    January 27, 2011 at 10:18 pm

    Your best bet is to go to your bank or credit union and talk to them about an equity loan. Some banks can write the loans quickly, others take more time. And with the way things are right now, they could be taking a bit more time than they used to because lenders are being more careful. It sounds like you have quite a bit of equity though. I won’t presume to know your age but perhaps a reverse mortgage would be better for you. Hopefully, someone at your bank is informed enough to assist you properly. I would call and make an appointment to sit down with someone and discuss your options.

    Good luck to you.


    Don’t listen to all the nonsense here about going to this or that website.

  4. Reply
    January 27, 2011 at 10:34 pm

    How long it takes depends on a lot of factors. Have you provided all the documentation they’ve requested? Being retired, your debt to income problem may be your biggest issue. Your score is adequate, how long you’ve lived there doesn’t really matter much, and the Loan-to-Value is good. The slow pays and the amount of debt could be an issue.

    Add up all the minimum monthly payments on your credit report, and divide the total by your gross monthly income. Be sure to include the payment for the new loan. If the ratio is 40 or 45%, you may be ok. If it’s more, you probably can’t get the home equity loan.

    You can also ask them if they would do a controlled payoff of that credit card debt. They would find out the balance on the accounts, make the check out to each creditor, have you sign them, and then mail them. By doing this they can subtract the payment for each of those accounts from your debt-to-income ratio, and maybe it can get to a point they can accept.

    If you’re over the age of 62, you might also consider a reverse mortgage. Here’s the AARP site: http://www.aarp.org/money/revmort/. Bank of America and Wells Fargo both offer them.

  5. Reply
    James O
    January 27, 2011 at 11:30 pm

    An average of 2-4 weeks. If you are having trouble with closing a loan I might be able to help refer you to someone.


    email me and I will give you his info.

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