Oregon Mortgages

PMI (Mortgage Insurance Update)

After reviewing some reports today I’ve found out some more information about PMI (Private Mortgage Insurance) in regards to it being a tax deduction. The good news is that was passed by congress and signed into law beginning in 2007. All is well there and anyone who is required to have PMI on a loan beginning in 2007 will be able to use it as a tax deduction.

The downfall is for the people who have PMI previously to January 1st, 2007 will NOT be able to use their’s as a tax deduction. It is unfortunate but it is what it is. For the people that have equity and are paying PMI, I would suggest that you check with your Mortgage Broker and see if it is a benefit to refinance to rid yourself of that payment.

Another limitation that applies to homeowners that will be affected by the PMI deduction is that it is limited to 2007 only. So unless something changes in the future as of January 1st, 2008 the deduction will no longer exist for people who buy/refinance. The people who took advantage of the ruling in 2007 will be allowed to keep the deduction for the life of the loan.

One other restriction that applies is list below directly quoted from the article itself.

“the original House and Senate legislation was income-limited to $100,000 per household (or $50,000 for married homeowners filing separately) a provision that appeared to disappear from the bill that was finally voted on in December. BNA, however, states that this provision did survive into the final version and that the allowable deduction for PMI is phased out by 10 percent for each $1000 the taxpayers adjusted gross income exceeds $100,000 (or every $500 above $50,000 for the married who file separately.) This would mean that the deduction is not available for anyone with adjusted income exceeding $110,000 or $55,000.”