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Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I would say yes. Income taxes are included in the calculations for income/debt ration, so based on current rates you might catch a break in qualifying. Some think the increased taxes will mean less money for buyers so home prices will drop. I think it would be the opposite. People renting would be able to get a big break on their taxes with the mortgage deduction and that will become more important with the tax increase. If it happens you will get equity faster which will help when you sell. There are still people (around here anyway) advertising no points or fees for a refinance, so there's little up front cost to save money every month.
The mortgage interest deduction has been, and continues to be, on the screen for revision. I doubt however it will go by the wayside overnight but instead will be first modified to increase revenue from the more expensive home owners. If the deduction was to be totally removed from everyone overnight, it seems reasonable to assume that demand for home purchases would suffer and so would prices. I have no idea what would happen to rent prices. They have been increasing here in Texas for the past few years.
Unless you are in the D.C. area, higher taxes will undoubtedly pull money out of local economies and will slow spending. I see it ever year in Texas during the months property taxes are due.
There is a fiscal cliff but some of us believe we plunged off that cliff a long time ago when each American began owing more money than they could ever hope to repay. Right now the Dems and Repubs are just trying to slow down the speed, and blame, of what was already headed our way.
How might the potential fiscal crisis affect mortgage refinancing? Rates are the lowest they have ever been right now. Should we jump on it ASAP?
You can refinance, and go with a 15-year fixed interest mortgage for as low as 2.75%. I don't know how much lower an interest rate a person could wait for.
If you can lock in an awesome rate right now, do it.
No reason to wait, really. I am just trying to take some time to do the research for a 30-year mortagage refinance. With the holidays coming up, and being a procrastinator, it could roll over into 2013 . Our credit is great, and we can buy points to get the best rate, but it seems like when it's all said and done it will cost in the neighborhood of 5-7K for points and closing costs. Does that sound right? Of course, we would prefer to pay next to nothing, if possible, as long as it was through a reliable lender.
I would say yes. Income taxes are included in the calculations for income/debt ration, so based on current rates you might catch a break in qualifying.
Income taxes have absolutely no impact on your DTI. The income used is gross before any and all deductions including taxes, health insurance, and retirement plan contributions.
My advice is to refinance before the fiscal cliff. If income taxes go up, homeowners will be more inclined to find any way to save money, which will dramatically increase the demand for refinances. Simple economics tells us that increased demand often correlates with one of two things: lower supply, or higher prices. Since there will be no shortage of mortgage companies available, supply won't be an issue. However, demand may prompt interest rates and closing costs to rise--albeit slightly--despite the fact that Ben Bernake and the Federal Reserve promised to keep interest rates low until mid 2015.
Moral of the story: it's better to be safe than sorry, so take advantage of the great opportunities while you know they're still available.
No reason to wait, really. I am just trying to take some time to do the research for a 30-year mortagage refinance. With the holidays coming up, and being a procrastinator, it could roll over into 2013 . Our credit is great, and we can buy points to get the best rate, but it seems like when it's all said and done it will cost in the neighborhood of 5-7K for points and closing costs. Does that sound right? Of course, we would prefer to pay next to nothing, if possible, as long as it was through a reliable lender.
Have you shopped around? I'm not that up on refinancing but it sounds like people have been getting refinanced for little to no closing costs. Plus with good credit you shouldn't need to buy points to get a great rate, rates are so low right now anyways. Is there anything else with the refinance that is complicated, is the home under water? What is your current rate?
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. Our credit is great, and we can buy points to get the best rate, but it seems like when it's all said and done it will cost in the neighborhood of 5-7K for points and closing costs. Does that sound right? Of course, we would prefer to pay next to nothing, if possible, as long as it was through a reliable lender. 
