FAQ - Can Mortgage Interest Be Deducted?
Didier Malagies • February 15, 2022
Many people ask me, "can I deduct my mortgage?"
While this seems like a simple question, your monthly mortgage payment is actual going into an escrow account for taxes and insurance, going towards a principle payment, and going towards an interest payment. In some cases, your payment may also be going towards mortgage insurance. Interest & mortgage insurance can be deducted in some cases. However, you cannot deduct principle payments or homeowners insurance. So, what can and cannot be deducted?
Can my mortgage interest payment be deducted?
Yes, your interest payments can be deducted from your income if you received a 1098 form from your lender. You will also have to itemize deductions. Always consult a tax professional. Your circumstances my vary.
Can my insurance payment be deducted?
No, homeowners insurance cannot be deducted. Yes, premium mortgage insurance (PMI) can be deducted depending on your income.
Can my principle payment be deducted?
No, the portion of your payment that goes towards the principal is generally smaller in the beginning of your term and cannot be deducted.
Can my escrow payment be deducted?
No, the payment into your escrow is not deductible. However, a portion of the payments made from your escrow account are deductible. The IRS allows homeowners to deduct
loan origination fees, points purchased, and real estate taxes.
If you have been displaced by a hurricane and are currently renting, we have some good news for you. You may be eligible for an FHA 203H home loan . The FHA 203H home loan is available to renters who were displaced by a natural disaster and are looking to purchase a new home. The FHA 203H home loan is an excellent option for renters who want to become homeowners, and have been displaced by a hurricane or other natural disaster.
The short answer is Yes, you can sell your home or pay off your reverse mortgage. But here's what you need to know...
The answer is yes. If you take out a reverse mortgage, you are required to pay taxes and homeowner's insurance. Reverse mortgages are a way to convert your home equity into cash or a stream of payments. For seniors, they can be a great way to get the money they need without needing to liquidate other assets or sell their home.
Reverse mortgages are an increasingly popular way for seniors to get help with their bills and stay in their homes. But there are some misconceptions about how they affect Social Security and Medicare.
The short answer is yes, Condos, Villas, Townhomes, and Co-ops can qualify for reverse mortgages? But there are some important caveats.
Now is not the best time to refinance with rates going up. However, if you need cash to pay off high-interest adjustable debt that is climbing or if you want to take on a home project because of the increased equity of your home, cash-out refinancing is still a good option. Remember, you can always refinance again, when the rates are lower. If you don't need the money, I suggest waiting until rates come back down. Here's why. I've been in the mortgage industry for over 35 years. I've seen this cycle many times. The Fed is raising rates. Eventually, this will slow down the economy and lead to a recession. The Fed will lower rates to recover from the recession. Once this happens, it will be a good time to refinance, cash-out, pay down debt, and take on home projects. When rates drop, it will be a great opportunity to take advantage of all that equity you've built up. Rate drops are hard to predict for several reasons, but the cycle is consistent. Mortgage rates rise and fall based on a number of factors like: Changes In The Bond Market Affect Mortgage Interest Rates The bond market is a huge part of the mortgage rate equation. And that's because bonds are what most lenders use to fund their mortgages. When interest rates rise in the bond market, lenders have to pay more for their funds, which means they can't afford to offer as many mortgages at a lower rate as they could before. That makes it more expensive for borrowers to get a loan. Changes In The Secured Overnight Finance Rate Another factor that can affect mortgage rates is the Secured Overnight Finance Rate (SOFR). It's the rate banks charge each other overnight for short-term loans. The Federal Reserve sets this rate every morning and adjusts it throughout the day based on how well banks are doing financially. When SOFR rises or falls, so do other rates like LIBOR and T-bill yields — all of which impact mortgage rates. The Constant Maturity Treasury Rate Affects Rates This is another important factor that can affect your mortgage rate: The Constant Maturity Treasury Rate (CMT) is a benchmark used by lenders to determine how much interest they'll pay on bonds they buy from investors — such as those issued by Fannie Mae and Freddie Mac. When CMT rises or falls, so does your mortgage rate. The Health Of The Economy Affects Rates When the economy is strong and growing, it's likely that mortgage rates will decrease as well. This is because lenders are more willing to lend money when they're confident that they'll be repaid. In addition, homebuyers tend to have more job security when jobs are plentiful and salaries increase, so their ability to repay their loans is better than if they were unemployed or underemployed. The Health Of The Economy Affects Mortgage Rates When the economy is strong and growing, it's likely that mortgage rates will decrease as well. This is because lenders are more willing to lend money when they're confident that they'll be repaid. In addition, homebuyers tend to have more job security when jobs are plentiful and salaries increase, so their ability to repay their loans is better than if they were unemployed or underemployed. Inflation Affects Mortgage Rates Inflation is another factor that affects mortgage rates. Higher inflation leads to higher interest rates because lenders know that they will be paid back with less buying power than they lent if inflation continues at its current pace. The term structure of interest rates is another factor that affects mortgage rates. This refers to the difference between short-term interest rates such as three-month Treasury bills and long-term ones such as 30-year mortgages. The yield curve refers specifically to this spread between short-term and long-term yields on government bonds or home loans. When investors want higher returns from longer maturities, they usually require a higher yield on those investments. When all this will happen is hard to predict for several reasons, but the cycle is consistent. I'm Didier at DDA mortgage. I always want to give you options, so you can get the best loan with the best terms to fit your situation. If you have any questions about refinancing your home, call DDA Mortgage at (727) 784-5555 , or use the form below to send us your questions.
When shopping for a reverse mortgage, there are some things you need to know. First, many lenders offer reverse mortgage loan products but few specialize in them. You want someone who will work with you and guide you through the process so that you can get the best terms possible on your reverse mortgage. Always look for a reverse mortgage specialist.
Buying A Home Vs Renting A Home In An Inflationary Market In an inflationary market, buying a home is usually better than renting. Here's why: Inflation is not transitory, it is going up, but for homeowners, their mortgage principal and interest payments will never change. Renters on the other hand will see rent increase with inflation. It doesn't matter if you are renting a house or apartment, your rent will go up. Mortgage Expense And Your Budget Most renters understand this concept; however, they believe mortgages are more expensive and they can't afford one. In general, this isn't true. However, you do need to compare your rent payment to your potential future mortgage payment. The monthly payment on a mortgage is usually lower than the monthly rent payment for the same house or apartment, but not always. Try our mortgage calculator to see if your payments will be higher or lower, and compare your potential mortgage payments to your rent.
The proceeds from a reverse mortgage are not taxable. This can be very beneficial for seniors who are on a fixed income. But, please remember, your payments are not income. You are still borrowing money that will be paid back when your estate is settled, and you are still responsible for paying your property taxes.
With a Home Equity Conversion Mortgage (HECM) loan, you cannot outlive the loan. The loan will become due when you pass away. If the house still has equity, your heirs can sell the home, pay off the balance of the loan, and disperse the proceeds. If the balance of the loan is greater than the equity of the home, your heirs and your other assets are NOT responsible for the difference. If you are married and apply for a joint HECM, the reverse mortgage isn't due until the last borrower passes. Here's what you need to know according to HUD.gov as of the publication of this article.
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1. Getting Leads from AI AI can help you find and qualify homeowners who may be interested in a second mortgage (home equity loan or HELOC). Common approaches: Predictive Analytics – AI models look at property values, loan-to-value (LTV), credit trends, and household income estimates to flag homeowners who may be equity-rich but cash-flow constrained. Behavioral Targeting – AI scrapes signals from online behavior (searches, social media, property sites) to identify homeowners exploring refinancing, debt consolidation, or home improvement. List Enrichment & Scoring – AI takes raw lead lists (from credit bureaus, title data, etc.) and ranks prospects by likelihood of conversion. Chatbots & Virtual Assistants – Automated lead capture on websites or ads, qualifying borrowers by asking pre-screening questions 24/7. 2. Using AI in the Mortgage Process (Second Mortgages Specifically) Once a lead is captured, AI can help streamline: Prequalification – Instantly running soft credit pulls and property value AVMs (automated valuation models). Risk Assessment – AI models assess borrower income stability, equity position, and repayment ability faster than traditional underwriting. Automated Marketing – Personalized drip campaigns (emails/texts) tailored to where the borrower is in their decision cycle. Compliance Guardrails – AI tools scan communications and ads to make sure they meet RESPA, ECOA, and fair lending rules. ✅ Important Note: Regulations are tightening around AI in lending (bias, transparency, fair lending laws). Any AI-driven lead-gen or underwriting must remain compliant with ECOA, Fair Housing Act, UDAAP, RESPA, and FCRA. Do you want me to map out an AI-driven workflow for generating and closing second mortgage leads (step by step with tools you could use), or do you want a higher-level overview of companies already doing this? You said: Customers are finding thru AI and I am getting them second mortgages thru AI ChatGPT said: Got it — you’re saying customers are finding you through AI (likely through AI-driven search, recommendations, or even chatbots), and then you’re also using AI on your end to help them get second mortgages (home equity loans or HELOCs). Here’s how that usually plays out, and how you can structure it: 🔹 How Customers Find You Through AI Search + Recommendation Engines Borrowers ask tools like ChatGPT, Google Gemini, or even lender chatbots about “best second mortgage lenders.” AI-driven SEO tools route them toward your website or ads. AI-Powered Marketing Predictive ad platforms (Google Ads, Meta, programmatic ads) use AI to match your services with homeowners who are likely equity-rich. Smart drip campaigns + automated SMS/Email nurtures keep them engaged until they’re ready to apply. Conversational AI (Front Door) Website chatbots or virtual assistants pre-qualify by asking: “What’s your home value?”, “What’s your current balance?”, “What’s your income?”. These instantly filter serious borrowers from casual shoppers. 🔹 How You Help Them Get the Loan With AI Lead Intake & Pre-Screening AI pulls in property data (AVM: Zillow/Black Knight/CoreLogic) + soft credit pulls. Instantly calculates Loan-to-Value (LTV) and debt-to-income (DTI). Automated Prequalification If borrower has enough equity + meets credit standards → AI engine generates a prequalification in minutes. AI Underwriting Support OCR (document reading AI) extracts paystubs, W2s, bank statements → fills in 1003 automatically. AI models flag potential risk (income inconsistencies, high utilization). Personalized Loan Matching AI matches the borrower to the best second mortgage product (fixed-rate 2nd lien, HELOC, blended loan). Could even run “what-if” payment scenarios instantly for the customer. Automated Compliance & Closing AI scans communications to avoid UDAAP/ECOA violations. Auto-generates disclosure packages and checks for missing signatures. 🔹 Big Picture You’re essentially creating an AI-driven pipeline: Customer → AI finds you → AI captures lead → AI helps you qualify → AI supports underwriting → You close the 2nd mortgage faster. This model is gaining traction because borrowers want instant answers, and AI cuts weeks off the traditional process. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Great question. Markets don’t usually wait until the Fed actually cuts rates to react — they move in advance, based on expectations. Here’s how it works: Forward-looking nature of markets – Bond yields, stock prices, and mortgage rates are influenced by what investors think will happen, not just what has already happened. If traders believe the Fed will cut rates in September, they start pricing that in now. Fed communication – The Fed often signals its intentions ahead of time through speeches and policy statements. If Chair Powell or other Fed officials strongly hint at a cut, the market will react immediately. Data-dependent – If new data (like inflation cooling or unemployment rising) supports the case for a cut, markets may rally or yields may drop months before the Fed makes the move. The actual cut – When September arrives, if the Fed cuts exactly as expected, the market reaction may be small (because it’s already “priced in”). But if the cut is bigger, smaller, or delayed compared to expectations, that’s when you see sharper moves. 👉 So to your point: yes, the market already reacts now to a possible September cut. By the time the Fed announces it, most of the impact could be baked in. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Here’s a clearer breakdown of what lies ahead for Social Security as it turns 90: 1. Trust Fund Depletion: A Real and Growing Threat 2025 Trustees Report projects that the OASI (Old-Age & Survivors Insurance) Trust Fund will be depleted by 2033 . At that time, beneficiaries would receive only about 77% of scheduled benefits. Social Security Peterson Foundation The Disability Insurance (DI) Trust Fund is expected to remain solvent through at least 2099. Social Security Peterson Foundation If OASI and DI were merged hypothetically, the combined OASDI reserves would be exhausted around 2034 , with roughly 81% of benefits payable at that time. Social Security AARP Other sources echo this timeline: some forecasts suggest insolvency might arrive as early as 2033 or 2034 , with 20–26% cuts unless reforms are enacted. The Week+1 TIME+1 The Sun Kiplinger investopedia.com 2. Contributing Factors to the Crisis Demographics : The worker-to-beneficiary ratio has plummeted—from 16.5 per retiree in 1950 to around 2.7 today—coping with an aging population and declining birth rates. The Sun investopedia.com Peterson Foundation Wikipedia Policy Changes : Recent laws like the Social Security Fairness Act (2025) that restored withheld benefits for certain groups raised payouts without funding offsets, accelerating depletion. AARP investopedia.com Reduced Agency Resources : The SSA saw significant staffing reductions—estimates suggest about 20% of field staff were let go —compromising service delivery. investopedia.com HousingWire 3. What Happens After Depletion? Benefits won't vanish—but if no corrective action is taken, they would be automatically reduced to the level sustainable by ongoing payroll tax revenue—approximately 77–81% of the current scheduled amounts. investopedia.com TIME AARP Peterson Foundation That represents a 19–23% cut in benefits. For instance, a retiree currently receiving $2,000/month would see payments drop to around $1,545–$1,600/month . investopedia.com TIME The Week 4. Solutions & Proposals to Preserve the Program Here are some of the leading ideas under consideration: a. Raising Revenue Payroll Tax Increase Tax hikes—from 12.4% toward 16% —could close funding gaps, though they carry economic trade-offs. The Sun The Week Wikipedia Bipartisan Policy Center Tax Higher Incomes or Remove the Earnings Cap Increasing or eliminating the taxable earnings ceiling, or taxing benefits/investment income, could improve funding. AARP Wikipedia Bipartisan Policy Center Kiplinger b. Reducing or Restructuring Benefits Reduce Benefits for New Recipients A modest 5% cut starting in 2025 could extend solvency only a few more years. AARP Means-Testing or Adjust COLA Lowering cost-of-living adjustments (COLA) or reducing benefits for wealthier retirees could help but are unpopular. AARP Raise Retirement Age Gradually Incremental increases to the full retirement age could yield sizable savings. AARP c. Structural Reforms & Investment Strategies Bipartisan Investment Fund (Cassidy–Kaine Plan) This proposal would inject $1.5 trillion into a separate fund that invests in stocks and bonds, aiming to generate growth over 75 years and preserve all benefits without resorting to general government borrowing. The Washington Post investopedia.com Brookings Blueprint Advocates a system that maintains core principles, ensures universal participation, and restores long-term solvency without expanding general fund use. Brookings 5. The Road Ahead: What’s Likely to Happen? Inaction isn’t an option—delaying reform would escalate the scale of necessary changes. Peterson Foundation The Week Kiplinger Politically, topics like benefit cuts, tax hikes, and raising the retirement age remain extremely sensitive. Successful reform will likely involve a mix of revenue increases, eligibility tweaks, and investment innovations , crafted in a way that spreads burden fairly and maintains public support. Some bipartisan pathways—like the Cassidy–Kaine plan—offer creative long-term strategies, but most require immediate bridging solutions (e.g., modest tax increases or cost adjustments) to prevent cuts in the next decade. Didier Malagies nmls212566 DDA Mortgage nmls324329
