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New homeowners tax break approvedGet today's rates from 4 lenders.
Before leaving for the holidays, Congress approved a new tax break for middle-income taxpayers who are buying a home in 2017!
This new bill will allow home purchasers to deduct mortgage insurance premiums on their tax returns. If a new homeowner applies less than 20 percent down on a home loan will have to pay mortgage insurance. This insurance is designed to protect lenders from defaulted loans. The cost of mortgage insurance is usually one percent of a home loan. The only caveat is, the deduction will expire at the end of 2007.
It is estimated that twenty percent of homebuyers have mortgage insurance. The full deduction is limited to homeowners with adjusted gross income of $100,000 or less.
Unfortunetly, you're out of luck if you're already paying insurance premiums on an existing mortgage. This deduction is only available for home loans issued after December 31, 2006.
Lobbyists for the deduction feel this will lead homebuyers away from piggy-back mortgages, which has become a popular strategy for avoiding mortgage insurance. The typical piggyback loan is when a borrower gets a first mortgage for eighty percent of the value and a second mortgage for ten percent and then pays the remaining ten percent. This prevents the homebuyer from borrowing more then eighty percent of the home value on any one mortgage.