A home should be cozy and comfortable. It should be your refuge after a day out in the elements. A home should also be affordable. Recently many people are realizing that they purchased more home than they could comfortably afford. Before you are completely overwhelmed call your mortgage company and try to negotiate or call a quality loan broker who might have options for you. (Email me and I am happy to recommend several quality mortgage brokerages, firstname.lastname@example.org.)
President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007, which will help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages. This Act will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed.
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I can give you great advice on Oakland and Berkeley area real estate, however I am not a tax specialist. Please contact your tax adviser regarding this new act.