Question by email@example.com: I am refinancing my 3 yr. arm mortgage & getting a fixed rate mortgage.?
I am refinancing to a fixed rate mortgage from a 3 yr. ARM. I have $ 16,825.37 in unpaid deferred interest. A mortgage broker told me this amount can be used either as an income tax deduction or to add to the principle of my new mortgage. I don’t understand the concept of this at all. I would like someone to explain this better.
Answer by Joseph G
If the interest in deferred, that means you wouldn’t have needed to pay it yet. How you could write that off your taxes without paying it is a mystery to me.
Now, with my ARM, I only paid interest, no principle. So I’m a bit lost on your situation. We may have different kinds of ARMs.
Anyway, what they would do is take the part of the debt you havn’t been paying (in your case, the interest I guess) and dump it into the new loan (the note) you are getting.
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