Why Paying Mortgage Insurance May Not Be A Bad Alternative For Saint Louis MO Home Buyers
We have seen numerous examples in which mortgage insurance is a more costeffective alternative to a second mortgage. Many Saint Louis MO home buyers select the wrong loan program as they are misinformed about mortgage insurance.
Home financing can be complicated enough but the Federal Government has done its part to add to the complexity The Tax Relief and Health Care Act of 2006 provides for new tax code that has implications for Saint Louis MO homeowners.
The act specifically addressed itemized deductions for government mortgage insurance MIP as well as private mortgage insurance PMI premiums paid during 2007.
For all residential loans initiated during the 2007 calendar year qualifying private and government mortgage insurance is taxdeductible for a borrower so long as two qualifications are met:
1Household income for the borrower is 100000 or less in 2007
2The residential loan is secured against a primary or secondary residence
The deduction is phased out for households earning more than 100000. The phase out is at a rate of 10 reduction per 1000 of additional income. The deduction is completely phased out at 110000. So for a nonmarried single homeowner who earns 90000 in 2007 and buys a home utilizing a loan program with Mortgage Insurance MI the MI expenses would be taxdeductible in 2007.
Ah but like many things there’s a catch! The new tax code was enacted for a finite period of time and is due to expire December 31 2007. Unfortunately until the act is extended there is no guarantee that MI will be taxdeductible in 2008.
For borrowers without deductibility mortgage insurance was a fairly expensive option when compared to second mortgages i.e. HELOCs home equity lines of credit. Post August 2007 with the market for second mortgages becoming smaller and more expensive the relative cost is leveling.
We have seen numerous examples of Saint Louis MO borrowers for which mortgage insurance is a more costeffective alternative to a second mortgage. Many Saint Louis home buyers select the wrong loan program as they are misinformed about mortgage insurance.
A full analysis via a mortgage planning session with a Certified Mortgage Planning Specialist should be conducted in order to determine which residential loan product is the most suitable. This is especially important given the “temporary” status of the mortgage insurance deductibility. The mortgage interest deduction applies to FHA VA and conventional loans.
About the writer: Tom Brailsford is the author and can provide you with additional information about property investment in Bulgaria. Additionally more comprehensive information is available at Bulgaria industrial property Bulgaria commercial property Bulgaria forest property
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