Sunday, January 14, 2007

Mortgage insurance is finally tax deductible

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 or refinances a home with a closing date on or 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 $109,000 or less a year, the new legislation allows you to deduct the cost of the MI premium2 on your federal tax return. It could mean an estimated $4003 in your pocket if, for example, you finance a $166,667 home with monthly borrower-paid MI and zero down payment.

Some comparisons to popular combo-loan packages many buyers have taken advantage of in recent years:

A mortgage with MI is now as affordable or cheaper
than most combo loans.

MI can be canceled, further reducing the monthly payment. Second mortgages must be paid in full.

MI payments are not rate-sensitive like many adjustable rate second mortgages.