Adoption Tax Credit Info

Adoption Loans & Resources

Posted on: June 8, 2010

Loans & Resources
Loans are one way to pay for some or all adoption costs. You can talk to your bank about home equity or line of credit loans. While loans do require repayment, there are resources that can help you with that once your adoption is finalized, such as the Adoption Tax Credit.

We want to help make your dream of adoption come true by providing resources and information about mortgage-based loans, credit cards, and other financial resources.

Home Mortgage Refinance
One of many ways to generate income to afford the expenses associated with adoption is that of mortgage refinancing. The decision to refinance has just as much to do with your circumstances as it does with the current interest rate available. For example, if you have an adjustable-rate mortgage (ARM) or your fixed-rate mortgage (FRM) is about to turn into an ARM, and the interest rate is going up, you might want to consider refinancing or renegotiating your mortgage rate. Other factors, such the amount of equity you have gained and whether or not you pay mortgage insurance, help to determine whether you are a good candidate for refinancing.

Refinancing can help by reducing your monthly mortgage payment, and the surplus could then go into savings toward your adoption expenses. It can also help if you are able to use your home equity and higher appraisal of your home’s value to refinance for an amount higher than your current mortgage, using the excess amount to help with your adoption expenses.

Home Equity Line of Credit
Though perhaps not the first approach to generating funds for an adoption, seeking a Home Equity Line of Credit (HELOC) has become the most common way for paying your adoption related expenses. This involves using a credit line to borrow against the equity in your home.

Many balk at the thought of going into debt for adoption expenses yet just as many may not think twice about taking out a loan for as much or more to buy a car, a house, go on vacation, etc. and spend 2 years or more making monthly payments to repay the loan. What better investment than in a child?

When choosing this method to generate the funds needed, keep in mind that you must pay this money back. You can use your full tax refund(s) from using the adoption tax credit.

Be careful to take out only what you can afford to repay monthly should you be unable to raise extra funds. Compare interest rates with lenders and banks for the lowest rates, and be sure to talk with a tax professional regarding the tax implications of this type of loan.

Funding Your Adoption With a Credit Card
Using a credit card to help pay for your adoption related expenses, or “borrowing” on your credit card, should be one of the last tools you take of the toolbox, but it is an option that many have used to help pay for the costs of adopting.

Sometimes the deadline for payment of adoption related fees arrives before a family can raise the funds. A credit card is a way to pay the immediate fees while generating the extra income needed. As the income is generated, immediately pay the balance of your credit card. Don’t be tempted to pay off the balance later.

Just as with other types of loans, use only what you’ll be able to repay; just because it is available doesn’t mean you should use it. Then pay off the full balance as quickly as possible. Shop around for the lowest possible interest rate with no annual fee. If you can pay off the entire balance within the introductory period of a zero interest credit card, you can use this option free of interest.

Get started with your Free Adoption Application today!

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