Should you make your January mortgage payment now?
December Homeowner Do's: Experts say it could help your tax situation to make your January mortgage payment a bit early. Plus, here's a must-do list for the month and a look at which remodeling projects you can squeeze the most value out of as 2013 draws near.
December is busy. We get it. But don't get so busy that you forget to do one thing: Consider making your next mortgage payment early.
Some borrowers who itemize deductions make their January payment before year's end. "This shifts the interest deduction in those months from next year to this year," explains Jack Guttentag, the Mortgage Professor. "This can be especially advantageous if the borrower expects to be in a lower tax bracket, or expects the tax rate to be lower, next year." (Bing: How low are interest rates right now?)
Here's how it works: You make mortgage payments at the end of each 30-day period you've been in your house or condo. That means that your mortgage bill dated Jan. 1 represents interest for this year — and that means you can put it toward your tax break for 2012.
A few caveats:
- First, you can only do this for January's interest, according to Bankrate.
- Second, make sure your payment will be credited as an interest payment for this year, says Eric Tyson, co-author of "Mortgages for Dummies." "I would strongly recommend that you contact the mortgage company by phone," tell them what you want to do and ask how to do it, Tyson says.
- Third, get your payment in with plenty of time for it to count toward this year. That way, the additional interest will appear on your annual statement, usually a Form 1098 or some federally approved substitute. Remember that Dec. 31 falls on a Monday, and it might even be a good idea to get that payment in before Christmas, just to be safe.
- When is that extra payment not a good idea? "It wouldn't benefit you if you expect to be in a higher tax bracket next year than you are this year," Guttentag says.
So if you have the money, consider scribbling that extra check. You'll be happier come April 15.
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Other December honey-do's
Take a few hours to tackle these end-of-year chores to really button up your house and garden for winter. When that winter wind blows, you'll be glad you did:
1. Get the house ready for winter.
- Check and update your home's emergency kit.
- Walk around your house looking for the beginnings of ice dams in the gutters.
- Make sure that the water to your outside faucets is shut off inside your house, and the lines are drained. Wrap pipes that pass through unheated spaces.
2. Tuck in the garden.
- Protect trees and shrubs from winter's worst by staking larger shrubs and trees to protect them from winter winds and covering the trunks of more tender trees in paper wrap.
- When the ground freezes, put an inch-deep layer of mulch around roses, strawberry plants and perennials.
- In very cold weather, put a few stakes around the perimeter of tender and early-flowering plants, then drape a cloth covering such as burlap or flannel over each plant without touching its leaves.
- On our blog, 'Listed': Where to find the best DIY advice online
3. Don't be landlord to a pest.
- Now is when mice and rats seek warm refuge. Don't let them.
- Cockroaches can make a move toward your house come winter. Remove woodpiles from near your house, and inspect any wood before you bring it inside.
The best remodels for your money
Winter is the time when a lot of homeowners start dreaming of spring and summer: remodeling season.
And now could be a better time to remodel than ever, with remodeling costs way down. But which remodels pay off best? Replacing exterior siding, replacing the entry door and adding an attic bedroom top the list of Remodeling Magazine's annual Cost vs. Value Report.
(In case you were wondering, here are the three that paid off the least: a home office remodel, a sunroom addition and a backup power generator.)
Dumbest thing you can do UNLESS you're about to retire or take a BIG cut in income! If not, don't do it because you'll eventually have an 11 month year if you ever want to get back on an annual track!
This advice comes from a guy who retired @ 53 and hasn't looked back in the seven years since!
If you really want to do something if you're carrying a mortgage, make 13 or 14 (if you can afford it) payments a year instead of 12! Now that's beneficial!!!
This article is just end of year space filling fluff!!!
Be very careful about paying your mortgage early. Please ask your bank because I made 15 payments in 2010 and paid more interest than 2009. No one in the bank could give me a answer. But some months ago I heard this story about a lady who nearly lost her house and it turn out that she paid the mortgage one day early but was on the month before hers was due. Since she did not pay between the 1st and the 10th she was late on her payment which is what I think happen to me. In 2011 I made my 12 payments between the days on the stub and my interest was $1100 less than 2010, I do understand that the loan is a little smaller than last..
I am not sure that making a 13th payment is the best thing to do. I believe there a lot of good ideas but you have to figure out what is best for you. I never leave my house with coins, they go towards principle only, I also leave $1 every day I work towards the principle only.
One last thought, make sure that your bank keeps your monthly mortgage payment separated from your principle only payments this way you will know that your extra principle only is going to principle only. I check every time I go to the bank on the internet to make sure they go it right, sad to say they have made a few errors which I have gone right down to them and have them change it.
How can anyone argue my point in the prior post? It's obvious that 4 people (and maybe more) do not understand money management.
Do you know how many people take advantage of this early payment? Anyone who has a head on their shoulder! Obviously this does not work for people who are not in good cash situation. Another way to get around that would be to borrow money on a line of credit for few days and make the early payment.
Why would someone not want to save on taxes??