For Some Homeowners, PMI Is Tax-Deductible Through 2010

The resurgence of private mortgage insurance continues -- if only because it's aided by Congress.

For eligible homeowners, lawmakers voted to extend the tax-deductibility of PMI through 2010.  The law was previously scheduled to expire at the end of 2007.

For all loans originated prior to December 31, 2010, and within those years, private mortgage insurance is 100% tax-deductible provided that two tests are met:

• The homeowner's household income is $100,000 or less in the calendar year
• The home loan is for a primary or secondary residence

For households earning more than $100,000, the deduction is phased out to the tune of 10% per $1,000 of additional income until it reaches 0% at $110,000.

So, if a single person earns $90,000 in 2007 and buys a home using PMI, the PMI expenses are tax-deductible in 2007.  If that person's income exceeds the threshold prior to 2010, the deduction is phased out.

As always, talk with your tax professional about how tax deductions work and whether you qualify for a PMI deduction.

Posted on December 20, 2007

 

We are a Mortgage Banker that offers FHA loans and the FHASecure program!

Why FHA is a great loan for many borrowers?

No minimum credit score requirement

Max Debt Ratios can be exceeded if consumer has other positive factors

With proof of payments on time can buyout a Chapter 13 Bankruptcy

Lower Mortgage Insurance Premiuns than most conventional financing

Purchase and refinance of Manufactured Homes as well

Cash out refinance to 95% LTV and rate and term refinances to 97%

Why work with a Mortgage Banker who manually underwrites FHA?

Our underwriters are trained to look at the file, understand the borrower's story (loan with a heart) and help get those loans APPROVED!

A "refer" (or turndown) on an FHA automated underwrite does not mean your client's loan is dead when you work with us.

 

What Is FHASecure?

FHASecure is a Federal Housing Administration program that will enable homeowners to refinance various types of adjustable rate mortgages (ARM?s) that have recently reset. Homeowners may refinance these ARM?s after the interest rate has adjusted, even if they made late payments or are currently delinquent after the rate adjustment. The FHASecure initiative is to be offered until December 31, 2008.

FHASecure is designed to help homeowners, who previous to their ARM reset demonstrated an ability to make their mortgage payments on time, an opportunity to refinance into a prime-rate 30 year fixed FHA-insured mortgage with no prepayment penalty.

HUD Secretary Alphonso Jackson advised the following:

"FHASecure will bring stability to the housing market and give eligible families who were in good financial standing before their loans reset a chance to keep their homes."

"Many hard-working American families who were able to make their mortgage payments under the initial teaser terms of the exotic loan are now struggling to make ends meet because their rates have doubled or tripled."

Brian Montgomery, Assistant Secretary for Housing-FHA Commissioner advised:

"FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates."

"These homeowners, many of whom are minorities, need a safe, affordable mortgage product that will help build wealth. All FHA borrowers pay mortgage insurance premiums to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer."

How Do Consumers Qualify For This Program?

The mortgage being refinanced must be a non-FHA ARM that has reset.

The Homeowner?s payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the homeowner was current in making the monthly mortgage payments, i.e., the homeowner?s mortgage payment history during the 6 months prior to the reset showed no instances of making mortgage payments outside the month due.

If there is sufficient equity in the home, FHA will insure mortgages that include missed mortgage payments.

FHA will insure first mortgages where 1 . the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or 2 . either the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing if the indebtedness exceeds FHA prescribed LTV and maximum mortgage amount limits.

Lenders must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the homeowner?s inability to make the monthly payments and that the homeowner has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.

Don't let your clients, co-workers, friends, or family work with a loan officer who does not have this important product to offer.