Personal Finance (Not Investing) • Cash purchase house and then refinance, Still eligible for mortgage interest deduction ?

Hi,

I have a house purchase contract from a builder.
Builder is willing to pay the closing cost (or discount) of $25k on only 2 conditions:
a. Take mortgage with them
OR
b. Full cash purchase.

If I take mortgage from other providers, builder will not give the said discount.

The builder has no incentive to give a good mortgage interest rate, they are quoting 7.5%
where as navy fed today quoted 6.5%

If I take mortgage from builder and then refinance with navy fed, I have to closing cost of approximately $18k again,
Thus making the overall discount from the builder is $25k-$18k = $7k only

Solution:
I will take margin loan from my brokerage account. It has enough to tide through. No worry about margin call.
Buy house with cash from the builder.
Apply for refinance from the Navy fed.
Thus pay closing cost only once
Get good interest rate from navy fed.
Pay off the margin loan to brokerage account with the money received from navy fed.

Am I doing this the right way ?

Reference:
https://www.irs.gov/pub/irs-pdf/p936.pdf
page 9:

Mortgage treated as used to buy, build, or
substantially improve home. A mortgage secured by a qualified home may be treated as
home acquisition debt, even if you don't actually
use the proceeds to buy, build, or substantially
improve the home. This applies in the following
situations.
1. You buy your home within 90 days before
or after the date you take out the mortgage. The home acquisition debt is limited
to the home's cost, plus the cost of any
substantial improvements


Thank you.

Statistics: Posted by sharukh — Mon Jul 29, 2024 4:39 pm — Replies 4 — Views 463

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