Tax Deductions for PMI Insurance on Mortgages

According to the Wall Street Journal, there is a new tax break for 2008 that will help some home buyers across the nation.

Those familiar with mortgages know that we often get saddled with an add-on charge to a new mortgage called PMI, or Private Mortgage Insurance.

If you've financed a home AFTER January of 2007 and make under $100,000 in adjusted gross income, you can use this additional fee charged as a deduction on your 2007 income tax.

The usual reason lenders tack on the PMI fees is because you've put less of a down payment than they like.  Another little known fact is that as soon as the balance of your mortgage reaches the crucial point, usually 80% of the appraisd value, you can request the PMI be dropped, and if your account has been kept current, they are obligated to do so. This can really lower your payments as well.  The kicker is, YOU HAVE TO REQUEST IT.  They won't be suggesting it to you, by any means.  But until that point, if you financed your home with less than an 80% down payment, it will be nice to have that extra tax deduction.

All lenders don't require the PMI fees, and with this new constantly irritating habit they have of selling your mortgage multiple times, you can also get lucky and have the extra amount dropped by the new mortgage company that has purchased your contract.  Now if they would just lay down rules to prevent the lenders from swapping you back and forth at whim, I would be happy

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