Borrowers who are closing loans in 2007 and who have annual combined household incomes of $100,000 or less now qualify to deduct the full cost of their mortgage insurance premiums on their federal tax return, according to a press release from the U.S. government. This legislation was passed by Congress and signed by President Bush in late 2006.
For homebuyers, this law helps to increase their buying power, simplify the mortgage process, create easier refinancing opportunities and broaden their cash-flow options.
"Making the cost of mortgage insurance tax-deductible helps those who need it most: low and moderate income Americans, primarily first-time homebuyers, who are financially responsible, but simply don't have the means to amass a 20% down payment," said Steve Smith, President of Mortgage Insurance Companies of America.
A mortgage insurance deduction will serve as an option to taking on a "piggyback" loan to cover a 20% down payment. The new law is expected to save nearly 1 million Americans a total of $91 million when they file their tax returns in 2008.
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