Mortgage Interest Deduction

Mortgage Interest Deduction – what is it?  if you’re a first-timer, or haven’t owned a home yet, you may wonder if it applies to you. This term has been splashed across the front pages of many media outlets. What is it and what does it mean for today’s homeowners?  The “mortgage interest deduction”, or MID, is a way for homeowners to recoup some of the cost associated with interest paid on mortgage loans for qualifying houses (there’s a cap), for both equity debt (loans to improve your home) and acquisition debt (loans to build or buy a home).

How much does it save today’s homeowners? According to Trulia.com, 38.5 million homeowners (around half) take the mortgage interest deduction. The average mortgage interest tax deduction is $12,200, and a typical benefit for home owners is $3,050 a year.

The National Association of Realtors (NAR,) has been a leading proponent of keeping the mortgage interest deduction alive, despite Washington toying with the idea of eliminating the deduction in hopes of saving the government money during these tough times where federal debt has reached new highs. With a federal debt load of over $14 trillion in 2011 it’s no wonder Congress is seriously considering ways of bringing in more taxes. Increased revenue could be a main solution in reducing our debt and increasing our financial stability as a nation.

Many first-time buyers aren’t even aware of this deduction, but the NAR retains that it is essential to keeping buyers coming to the table and helping the housing market improve. The real harm could come from essentially raising taxes on already struggling American families, they say.  Moe Viessi, NAR President, stated, “NAR firmly believes that the mortgage interest deduction is vital to the stability of the American housing market and economy. We urge the president and Congress to do no harm.”