Here is some interesting info that was sent to me, I found it very interesting for those of you who may not have herd of this or this could help you understand this a little better. Will this effect what loan program your clients use??? Again this was not produced by me so I am just passing this info on.
Produced by Genworth Financial, Inc, 2006
If you've been holding off on a decision to buy a home or refinance, your wait is over. Congress
has just passed the long-awaited legislation that will make mortgage insurance premium
payments tax deductible for anyone who purchases a home after January 1, 2007. It's the
news you've been waiting to hear to make your dream of homeownership a reality.
How A Mortgage Insurance Tax Deduction Helps You
If your family earns under $110,000 a year, the new legislation allows you to deduct the
cost of the MI premium(1) from your income on your federal tax return. It could mean an
estimated $400(2) in your pocket if, for example, you purchase a $166,667 home with monthly
borrower-paid MI and zero down payment.
The extra savings can help you:
• Get into a home you might not have otherwise
• Build equity faster
• Protect your current home investment
Even More Advantages for Homebuyers
If you're torn between a loan with mortgage insurance and a "combo" loan, do you want
security and simplicity? Or risk and volatility? MI is the smart choice because it's:
COMPETITIVE - A mortgage with MI is now as affordable or cheaper
than most combos.
CANCELABLE - MI can be canceled, further reducing the monthly
payment. Second mortgages must be paid in full.
PREDICTABLE - MI payments are not rate-sensitive like many exotic
or combination loans.
TAX DEDUCTIBLE - Mortgage insurance is now tax deductible!
Ask your lender about the many benefits of mortgage insurance from Genworth, including the
new tax deductibility feature, today.
(1)The MI premium is fully deductible at $100,000, and phases out for annual earnings between $100,000 and $110,000.
(2)Based on $166,667 mortgage at 100% LTV for a borrower in the 25% tax bracket with full deductibility.
Tax implications may vary - consult a tax professional for advice on tax deductibility.
©2006 Genworth Financial, Inc.
All rights reserved.
Frequently Asked Questions About MI tax deductibility feature
Q. What is mortgage insurance tax
deductibility?
A. This refers to the new federal legislation
recently passed by Congress that makes the
mortgage insurance (MI) premium paid by the
homeowner tax-deductible for federal income
tax purposes.
Q. How will a MI tax deduction help
homeowners?
A. Until now (as of 1/1/07), borrowers could
not deduct the cost of their MI payments
from their income for Federal tax purposes.
With deductible MI premiums for individuals
and families earning under $110,000 a year,
the cost of homeownership is further reduced.
This helps borrowers get into homes they
might not have otherwise.
Q. How much will a typical homeowner with
MI save?
A. We estimate that eligible homeowners will
save $200-$400 annually.
Q. How many people use mortgage insurance?
A. Approximately 10 million people now use
MI. Mortgage Insurance is a critical factor in
helping first-time, low-income, middleincome
families and emerging market buyers
become homeowners. Over the last five years,
MI programs covered 47% of all home
purchase loans made to African American and
Hispanic borrowers, and 47% of borrowers
with incomes below the median income for
their area.
Q. Why did this legislation pass?
A. Homeownership helps create stable and safe
communities. That's why expansion of
homeownership has been a long-standing
goal of the Federal government. The added
deduction for MI will help put that goal within
tax deductibility
Genworth Mortgage Insurance
Frequently Asked Questions About
mi tax deductibility feature
reach for many groups that have typically been
unable to purchase homes -- young people,
low-income, and emerging market buyers.
Q. What does this legislation specifically
cover?
A. This legislation affects anyone who purchases
a home after January 1, 2007, and pays a MI
premium. Mortgage insurance premiums will
be fully deductible for taxpayers earning up
to $100,000. The amount of the deduction
phases out for annual earnings between
$100,000 and $110,000. No tax deduction is
available for anyone with adjusted household
income in excess of $110,000.
Q. When will the MI tax deduction be
available?
A. The tax deductibility will be available for home
purchased after January 1, 2007, subject to the
earnings limitations mentioned above.
Q. Will this deduction be available indefinitely?
A. As the legislation currently stands, the MI tax
deduction will be available for the tax year 2007.
However, Congress may extend the deduction
to future tax years.
Q. What is a lender's responsibility?
A. The lender will need to include the
homeowner's total MI premium in their end-ofyear
statement. The homeowner is responsible
for the deduction.
Q. How will the homeowner know the amount
of the MI paid?
A. The amount of the MI premium is listed on
the disclosure documents that borrowers
receive at closing. It is also listed on the annual
escrow statement the borrower receives from
the loan servicer each year.
©2006 Genworth Financial, Inc.
All rights reserved
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