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Finally, Mortgage Insurance Premiums Are Tax Deductable!

By
Real Estate Agent with Home Run Real Estate

December 2006 - Congress has finally passed a law that now makes mortgage insurance premiums (those insurance cost in your payment because you put less than 20% down at closing) tax deductable as long as your adjusted gross income is under $100,000.  Economists estimate that this one law change will save Americans roughly $91 million dollars just in 2007.

What does this mean to you?  Interest savings, tax savings, ect.  Many loans will become much more competitive because many home borrowers opted for higher interest rates in lieu of mortgage insurance.  What many failed to realize was that once they hit that magic 20% equity threshold their mortgage insurance could be dropped leaving them with lower payments while those who opted for the higher interest rates still have the same payments. 

It should be noted that this law still needs to be approved by President Bush but there is no indication that he will veto it.  It should also be noted that this law change is in effect for 2007 only and will require another act of congress to continue it in 2008 and beyond.

 

Find other interesting information and services at the following websites...

 www.RealtyInfoPages.com

www.ExpertHomePrice.com

www.ExpiredListingKing.com

www.WestMiMLS.com

www.VipBuyerList.com

www.eforeclosurefinder.com

 

Marc Blasi
Palm Beach Gardens, FL

I could be wrong - but I believe the $100000 income is for couples - if it's a single person they're capped at $50000.

And in addition to hitting that >20% equity mark, the Borrower(s) would have to wait a minimum of 12 (if not 24) months to get rid of the insurance.

Dec 26, 2006 09:06 AM
Anonymous
Lloyd Reed
You are probably right about the $50,000 cap for singles.  I will clarify that.  Also, it does generally take a few more than 2 years to gain a 20% equity stake but I have seen a few savvy people get a great deal and refinance shortly after when markets were increasing, allowing them to get rid of the mortgage insurance.  Bottom line, most buyers should expect it to take a minimum of 4 to 7 years if you assume the modest average 3.5% increase in home values historically.  Thank you for your comments and have a great day.
Dec 26, 2006 09:58 AM
#2
Terry Lynch
LAR Notary and Closing Services - Saint Clair Shores, MI

At first glance this seems like great news. The problem is, with the deduction possibly only good for a year, I would be very reluctant to recommend someone taking the MI when in 2008 it may go away and at that point who do you think is going to be the bad guy ?

Only being able to use the deduction for a year makes the formula very tricky, but in most cases one year of an MI decuction isn't going to be a good option. 

Feb 13, 2007 12:37 PM
Marc Blasi
Palm Beach Gardens, FL

Lloyd-

I know it generally takes longer than 2 years!

Is said the Borrower would have to wait a minimum of 12 ( to 24) months - meaning regardless of other factors a person would HAVE to keep it at least that long.

 

Feb 13, 2007 09:37 PM