Mortgage Insurance is Now Tax-Deductible

Here's some info that just might save you money on your taxes nest year! Mortgage lenders usually require mortgage insurance for borrowers who have less than a 20% down payment. This insurance covers the lender in case the borrower defaults on the loan. Mortgage insurance has made homeownership more accessible for most Americans.

One of the problems with mortgage insurance is that it is not tax-deductible like mortgage interest and is viewed as something to be avoided. Over the past decade, “piggyback” loans have become a popular alternative to mortgage insurance. By combining a 1st mortgage for 80% of the sales price and adding a 2nd mortgage (piggyback) for the remainder, you can avoid mortgage insurance.

Over the past couple years, though, many people have seen the disadvantages of the piggyback loan. First, over the past couple years, short-term interest rates such as the Prime Rate (which many 2nd mortgages are tied to) have risen dramatically, thus increasing the payments on the second mortgages. Many people are now paying more than they would have with the one mortgage and mortgage insurance.

Second, borrower can eliminate mortgage insurance after a period of time, as long as they maintain a good payment record and are at a certain loan to value level. So, if your home appreciated in the past couple years, and you made your payments on time, you could have eliminated the mortgage insurance by now. With the piggyback loan, you would have to refinance it with your 1st mortgage into one loan – but rates are higher now.

Lastly, there is the convenience factor - two loans, two applications, two set of underwriting guidelines, and two payments to make. Many people would just rather make one payment per month and not have to worry about it.

In December 2006, Congress approved legislation that will make mortgage insurance payments tax-deductible.

• Effective for the 2007 tax year on loans closed on or after January 1, 2007
• For households with adjusted gross income of $100,000 or less
• 100% deductible mortgage insurance premiums for qualified applicants
• Simplified mortgage process — only one loan needed!

This law is expected to save nearly 1 Millions Americans about $91 Million when they file their tax returns in 2008. This will make the option of mortgage insurance much more attractive to more people than it has in the past.

However, this legislation is only for one year and only covers borrowers with an adjusted gross income of $100,000 or less. So, there are still several reasons that you may want to consider a piggyback loan. A mortgage professional can help you weigh the pros and cons of all of your options.

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3 Tips for Selling in a Slow Market

Janet E. from Chicago asks - "With the market slowing down, I'm seeing houses sit longer before selling. We're planning to sell in the spring -- what can we do to help our house sell faster?"

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Good question, Janet! I've asked one of the leading Realtors® in my area to "guest blog" today and answer your question.


Colleen Basinski from Coldwell Banker in Tinley Park, IL offers this expert advice:

It's true that homes aren't selling as fast as they were earlier in the year, but there are 3 things you can do to help your home sell itself.

1.) DRESS FOR SUCCESS. Dress your house up to look as warm and inviting as it can be. Get rid of clutter & debris. People need to see the potential of a house, so the less they see, the better. Don't leave packing boxes in rooms or hallways, they make the house look smaller.

Tidy up kitchens and baths - stash the haircare products under a sink or in a closet. Toss the dishes into the dishwasher. And give each room a focal point - flowers on a table or a greatart book on a coffee table. Get rid of random photo frames and knick knacks - everyone won;t share your taste. There are a lot of shows on tv today that give great examples of how to do this, and some people actually hire 'stagers' who come in and dress your home for you.

2.) PRICE IT RIGHT. Let's face it, everyone thinks their home is worth a lot of money, but you can't price a house based on emotion. If you really want to sell your home, you need to look at what similar homes are selling for, and then price it properly. And don't price high to allow for negotiation room. If you price it too high, a lot of perfectly good buyers may not even look at it because it is not in their range. If you want to get $350,000 for your house, for example, don't price it at $375,000 and plan to come down later if you need to. Someone looking in the $300-350K range may never look at your house, but might have been willing to pay $350,000 to begin with.


3.) HIRE A GOOD REALTOR®. A lot of people are selling homes on their own today, thinking they can save money on the agent's fee. And if you have a lot of time, and are willing to do the work, it might work out for you. But if you truly need to sell your home, you need to hire a professional. Good agents really earn their fee, and often will get you a higher price than if you had negotiated on your own. Good agents know the market, they know how to negotiate, and they know how to help sell your home, not just list it. Get referrals from friends if they used an agent they liked.

In the end, if your house looks good, is priced right, and is represented by a good agent, you should have no problem getting buyers who are interested.

Contact Colleen at:

Colleen Basinski
Coldwell Banker
7615 W 159th Street
Tinley Park, IL 60477
(708) 612-2248
http://soldbycolleen.point2agent.com

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There’s a better way to find and finance your new home!
I've been selected and certified as a Preferred Lender of HBM II and can assist you in determining your comfortable price range for listings that will be presented to you on the Home Buyers Scouting Report®. I specialize in free mortgage pre-approval and guidance through every step of the home loan process. Call or email me today if you would like an introduction to one of my trusted real estate agents, certified home builders or financial advisors or more information about the Home Buyers Scouting Report ®.

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*In some markets not all of the listings, addresses, mapping & other property information is available because of local rules & regulations. The Preferred Loan Officer’s role is to assist in determining a comfortable monthly payment and price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for properties within your search criteria. The Preferred Loan Officer is neither an employee of HBM II nor the provider of the Home Buyers Scouting Report® (HBSR). The real estate agent is not an employee of HBM II, but works cooperatively as a
licensed real estate professional to assist in your Home ScoutingTM efforts. The Home Buyers Scouting Report® (HBSR) is a free home finding service of Home Buyers Marketing II, Inc. (HBM II), a licensed real estate company that provides the Report directly to homebuyers through a secure, password-protected online service.
© Copyright 2006, Home Buyers Marketing II, Inc.

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HAPPY NEW YEAR!

It's a new year and that means it's time to watch your mail for your W2s and other tax statements you'll need for your taxes. Don't forget, your mortgage interest may be tax deductible - so consult your tax professional.

A new year also brings new ideas - and one new idea I'll be incorporating this year is Guest Bloggers. I'll be tapping the brightest minds in real estate - from real estate agents to appraisers to home inspectors and more. And of course, you will continue to find answers to your questions about home financing and mortgages from me.

So send in your questions, and we'll be sure to answer them in upcoming blogs! And most of all, enjoy a wonderful new year!