Big news from Congress...and I wanted to share this with you right away!
As you probably know, Private Mortgage Insurance (PMI) is required anytime a loan is taken out with a "loan to value" ratio of 80% or higher...yet historically, these Mortgage Insurance premiums have never been tax deductible.
But Congress just passed a law with a change to the tax code which will allow Mortgage Insurance Premiums to be claimed as tax deductions for households earning less than 100k annually.
What does this mean for your clients?
Primarily, it means that mortgage options that include standard Private Mortgage Insurance will now become much more competitive and attractive, especially as PMI can often be removed with sufficient property appreciation or declining loan balance, assuming timely payments.
Since clients traditionally have turned to "piggyback" second mortgages as a way to avoid mortgage insurance, this news is particularly welcome, as second mortgage rates have risen dramatically in recent years.
This piece of legislation still requires President Bush's signature, but at this time there is no indication that he will not sign it. Also, the current legislation applies to new loans closed in 2007 only, and as such, will require another act of Congress to be extended to 2008 and beyond.
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