ERATE Insightful
     Best Mortgage Rates Source for over 15 Years

Economic News

Sun sets on mortgage insurance deduction

Broderick Perkikns

by Broderick Perkins
DeadlineNews.Com

(1/27/2012) Erate Exclusive - The mortgage insurance tax deduction is history and that means owning a home is more expensive.

Originally effective Jan. 1 2008, the "Mortgage Forgiveness Debt Relief Act of 2007" was largely known for temporarily exempting from taxation, any debt a lender forgave as part of a short sale, principal write-down, canceled second mortgage or other mortgage work out.

Before the law was passed, such forgiven debt was often, though not always, taxed as income. That portion of the law remains in effect through 2012.

The law also contained a provision that likely benefited more homeowners - a tax deduction for government or private mortgage insurance, first available to those who purchased or refinanced homes (only up to the original loan amount) in 2007. Some second homes also qualified.

The mortgage insurance deduction provision was later extended for those who purchased or refinanced homes from the 2007 to 2011 tax years.

Lenders levy mortgage insurance to protect themselves from risk when a borrower's down payment is less than 20 percent of the purchase price and other loans are not used to make up the difference.

Mortgage insurance primer

For years, especially during boom times, using mortgage insurance has been a way for savings-poor, but income-rich buyers to afford a home that was otherwise out of reach. It remains popular, especially in high-cost markets where it's tough to come up with 20 percent down.

The home owner pays the mortgage insurance premium, but the insurance protects the lender from the risk of financing more than 80 percent of the cost of a home. Studies show borrowers with smaller starter equity stakes in their homes — less than 20 percent - have more mortgage payment problems than those who have larger equity stakes - 20 percent or more.

The cost of mortgage insurance is equal to about one-half of one percent of the mortgage amount, or about $1,000 on a $200,000 loan. A homeowner in the 25 percent tax bracket, would save about $250 before the law expired.

The average annual tax savings was between $300 and $350 per family, according to the Mortgage Insurance Company of America (MICA), more for higher cost homes.

Removing mortgage insurance

Now, the only break homeowners can get on mortgage insurance is getting rid of it when they qualify.

To protect mortgage insurance consumers from paying the insurance longer than necessary, another federal law, the "Homeowners Protection Act of 1997" grants homeowners greater disclosure rights and the right to cancel the insurance once they reach certain equity level milestones.

The current dysfunctional U.S. Congress isn't likely to revive the mortgage insurance tax deduction provision, which was overlooked during year-end budget skirmishes.

Follow the link to continue reading the related articles.

State of the Union Address offers little for housing market

Banks tightening squeeze on consumers

How to offset the rising cost of rent

Tax advice for year-end charity contributions

Proposed mortgage tax break battle looms

Homeowners insurance goes to school

 

 

 


 

 

 


 

 

 



    Fannie Mae & Jumbo Mortgage Rates
    Just One Click!
= Current Rate Chart
Pennsylvania Mortgage Rates Current Mortgage Rates - Hawaii Current Mortgage Rates - Alaska West Virginia Mortgage Rates Virginia Mortgage Rates District of Columbia Mortgage Rates Maryland Mortgage Rates Delaware Mortgage Rates New Jersey Mortgage Rates Connecticut Mortgage Rates Rhode Island Mortgage Rates Massachussetts Mortgage Rates New Hampshire Mortgage Rates Vermont Mortgage Rates New Hampshire Mortgage Rates Maine Current Mortgage Rates Vermont Mortgage Rates Current Mortgage Rates - New York Current Mortgage Rates - Michigan Current Interest Rates - Wisconsin Current Mortgage Rates - MINNESOTA Ohio Mortgage Rates Current Mortgage Rates - Kentucky Current Mortgage Rates - Indiana Illinois - Current Mortgage Rates Current Mortgage Rates - Iowa Missouri Mortgage Rates Current Mortgage Rates - North Carolina South Carolina Mortgage Rates Current Mortgage Rates - Florida Current Mortgage Rates - Georgia Current Mortgage Rates - Tennessee Current Mortgage Rates - Alabama Current Mortgage Rates - Mississippi Current Mortgage Rates - Louisiana Current Mortgage Rates - Arkansas Current Mortgage Rates - Oklahoma Current Mortgage Rates - TEXAS Current Mortgage Rates - New Mexico Current Mortgage Rates - Arizona Current Mortgage Rates - Kansas Current Mortgage Rates - Nebraska Current Mortgage Rates - Colorado Current Mortgage Rates - Wyoming South Dakota Mortgage Rates Current Mortgage Rates - North Dakota Current Rates - Montana Idaho Current Rates Washington Mortgage Rates Current Mortgage Rates - Oregon Current Mortgage Rates - Utah Current Mortgage Rates - Nevada Current Mortgage Rates - California








Real Estate Market News
  • New consumer finance bureau opens to criticism
  • Watchdog SAFE Act curbing toxic mortgages
  • Many consumers chronically mystified by mortgage maze
  • Why housing consumers say you need a real estate agent
  • States offer incentives for green improvements
  • More borrowers reach for ARMs
  • California issues consumer alerts for mortgage fraud
  • Why vacant homes are a tough sell
  • Could you qualify for a 'Qualified Residential Mortgage?'
  • Government failed housing, but continues heavy housing subsidies
  • Disconnect between what buyers, sellers want
  • Is your real estate agent packing the latest technology?
  • Mortgage maze still leaves home buyers in a haze
  • Jobs-housing connection a key indicator to watch
  • Investors move to the head of the home-buying class
  • Foreign buyers cashing in on U.S. housing closeout sale
  • S&P/Case-Shiller index confirms 'double-dip,' home buying opportunities
  • Half of consumers can't come up with down payment
  • Erate's 'Dirty Half Dozen Digital Ways to Buy or Sell in Today's Housing Market'
  • Married couples ready to take the plunge
  • Utah BBB issues EZ Loan Protection alert
  • ACORN shellacking was just nuts
  • Housing to take center stage in 2012 election
  • Don't over look credit union mortgages
  • Renting gets tricky
  • Voters united over homeownership
  • Big break for California short sellers
  • New survey ferrets out top markets for SFH rental property investments
  • Consumer watchdog opens amid efforts to defang the new agency
  • Housing counseling generates optimism during tough times
  • Feds target deceptive mortgage advertising years after ads contributed to crash
  • Mortgage rates eye of Wall Street storm after S&P downgrade
  • Feds pondering how to unload government-owned distressed properties
  • Best Back-to-School Real Estate Investment Cities
  • Investors better than banks, Feds at shrinking distressed inventory
  • Gauge your housing market's recovery and cash in
  • Home ownership beats renting, if you can get a loan
  • It's housing, stupid
  • Mortgage morass gets murkier

  • Refinancing: Selecting a Loan
  • Mortgage Program Options
  • Interest Only Mortgage
  • 100% Mortgage Financing - No Down Payment
  • Mortgage Rates Comparison
  • Mortgage Rates Tracker
  • Search for Mortgage Rates
  • No Costs Mortgage Refinancing
  • 2% Rule - Refinancing Mortgage
  • Yield Spread Premium
  • Zero Costs Mortgage Refinancing
  • Prepayment Penalty - Mortgage Refinancing
  • What is APR and how is it calculated?
  • Private Mortgage Insurance - Refinancing

  • Moving Ahead With Your Refinance
  • Apply for a Mortgage
  • Is it best to pay points up front to reduce the interest rate?
  • Rate Lock info - Refinancing Mortgage
  • Refinancing Mortgage Tax Information
  • Should you pre-pay your mortgage?
  • Title Insurance for Mortgage Refinancing
  • Homeowner's Insurance
  • Earthquake Insurance - Refinancing Mortgage



  •   ERATE on Twitter
    Android app on Google Play ERATE App FREE on iTunes HACKER SAFE certified sites prevent over 99.9% of hacker crime. ERATE is a BBB Accredited Mortgage Broker in Santa Clara, CA
     
    The information contained on this website is provided as a supplemental educational resource. Readers having legal or tax questions are urged to obtain
    advice from their professional legal or tax advisors. While the aforementioned information has been collected from a variety of sources deemed reliable,
    it is not guaranteed and should be independently verified.
    Copyright 1999-2013 ERATE All rights reserved ·ERATE does not fund or broker mortages or loans.
    ERATE · 2900 Gordon Ave · Santa Clara · CA · 95051






    ERATE iPhone App - iTunes