homeowners insurance mi
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 cost-effective 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 tax-deductible for a borrower so long as two qualifications are met:
1-Household income for the borrower is $100,000 or less in 2007
2-The residential loan is secured against a primary or secondary residence
The deduction is phased out for households earning more than $100,000. The phase out is at a rate of 10% reduction per $1,000 of additional income. The deduction is completely phased out at $110,000. So, for a non-married single homeowner who earns $90,000 in 2007 and buys a home utilizing a loan program with Mortgage Insurance (MI), the MI expenses would be tax-deductible 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 tax-deductible 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 cost-effective 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.
Land Contract Question(s)?
We’ve been trying to sell our home (in MI) for about 2 years now, & finally found someone happy to purchase it on a land contract. Our mortgage co said OK (as long as it’s a 3-year deal) and we’ve agreed on a full price, and also figured out what the monthly P&I payment would be…now what? I called a title co & they will do the title work (insurance…what a rip-off!) & will host the closing for another $300. Cool! But I don’t have a clue how this will work technically. For example, does the buyer pay the mortgage co the P&I every month, using OUR account/loan number, then set up their own escrow acct for taxes and homeowner’s insurance? What would the purch agreement look like? Where can I FIND a good purch agreement template? Oh, help. Please. I’m a little confused and they want to move in on Aug. 1…
What if they don’t make the payments as they are supposed to? (if it goes into foreclosure will it result in liability for you?) Will you call the mortgage company every month to check and see if they are on time? Will late charges affect your credit?
How can the buyer be assured that your future actions would not result in a lien against the house?
You really ought to get a lawyer to draw this up and answer all these questions.
