home ownership accelerator loan

[NECPA in NEBRASKA]

Does anyone have any experience with these new loans? Client is asking me about the advisability of refinancing their home acquisition mortgage with one of these new lines of credit. I told them that I will only advise them on the tax aspect, because I am not a financial planner. I have looked at many of the websites, and it may be an advantage to them, because they are dedicated and probably will pay down their loan faster than normal. What is really bothering me, is that the mortgage lender, is telling them that they can use this account as a sweep account and put monies from their two S Corps, into it and take it out as needed. They told them that they could do this as long as they wrote notes from the corps to them personally every time. This doesn't sound like a very good idea to me. I can't find any place on any of these mortgage websites, advising people to commingle personal and corporate money. I am worried that this will affect the deductibility of the mortgage interest. It will still be a mortgage on their personal home, but they could essentially be paying it down with corporate monies. I'd appreciate any thoughts, especially from anyone who has dealt with these loans.

Bonnie

[TAXBILLY]

Lot's of info but I don't have any experience with it.

http://www.dogpile.com/dogpile/ws/results/...=7?_IceUrl=true

taxbilly

[NECPA in NEBRASKA]

Thanks, Taxbilly. I've looked at a bunch of these websites. (Like I have nothing better to do). The client will be surprised when he gets a bill. I've only been able to find a couple of places that weren't trying to sell them.

[TAXBILLY]

Don't you love it when they come in and want you to educate them on something at the worst time of the year? They never come in June or July.

taxbilly

[Booger]

Thanks, Taxbilly. I've looked at a bunch of these websites. (Like I have nothing better to do). The client will be surprised when he gets a bill. I've only been able to find a couple of places that weren't trying to sell them.

NECPA good luck in trying to collect THAT fee.

I would remind your client's about the imputed interest rules on loans to/from their S Corps.

As long as they take the money out of their S Corps as SALARIES or DIVIDENDS, then this

"loan accelerator" might not be a bad idea.

Booger

[jainen]

>>remind your client's about the imputed interest rules<<

And remind them what commingling business and personal assets can do the liability shield which was the whole point of forming an S-corp.

[NECPA in NEBRASKA]

Jainen,

I reminded them about that already. I also told them that I had a hard time imagining that they would remember to always write a note with interest every time, if they were going to use it as a sweep account. Obviously, the prospective lender made it look easy to them.