Congress has just passed, and the President has just signed into law, legislation making mortgage insurance tax deductible beginning in 2007. The new legislation allows homebuyers with adjusted household incomes of $110,000 or less who purchase a home after January 1, 2007 to deduct their mortgage insurance premium from their federal income tax returns. The new rule is expected to make housing more affordable for lower-income, first time and emerging market homebuyers.
It is anticipated that homebuyers who would have leaned toward riskier "combo" loans will find a single loan with mortgage insurance more competitive as the mortgage insurance payment is fixed for the life of the loan and is cancelable once the homeowner can show they have a loan to value ratio of less than 80 percent.
To find out if you are eligible to take advantage of this new tax break, contact your tax advisor. If you do not have one, I can refer you to one.
If you have been in your home for 3 to 5 years or longer and you feel like you may have at least 20 percent equity in your home, I will be happy to do a comparative market analysis for you to help you determine whether or not it is time to cancel your mortgage insurance. If you find you have at least 20 percent equity in your home you can cancel your mortgage insurance and reduce your monthly payment by the amount of your monthly mortgage insurance payment. If you have any questions, I will be happy to discuss them with you.
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