If you’ve been struggling with Private Mortgage Insurance (PMI) or have been putting off purchasing your home because of expensive PMI premiums, a new Federal tax law on the books could bring you some much needed relief.
Starting in 2007, homeowners with Private Mortgage Insurance premiums have an itemized deduction for PMI premiums on their homes. There’s a catch though, the deduction is available only on mortgage contracts issued in 2007. If you have an existing mortgage and are paying for Private Mortgage Insurance it may be worth your while to refinance even if you cannot drop PMI with the new loan.
If you’re not already familiar with Private Mortgage Insurance, this costly expense is routinely inflicted on homeowners that lack the necessary 20% down payment when purchasing their homes, or existing homeowners that fall below a certain level of equity in their homes when refinancing. Private Mortgage Insurance is expensive and can add hundreds of dollars to your monthly payment amount. If you’re an existing homeowner that has been putting off refinancing because of PMI, the new tax law could save you money on your Private Mortgage Insurance premiums.
In order to fully take advantage of this tax deduction your income must be less than $100,000. If your income is below $110,000 you will be allowed a partial deduction; however, if your income is above $110,000 you’ll have to sit this deduction out. Homeowners that meet the income requirements are eligible for this tax deduction in addition to their existing mortgage interest and property tax deduction.
If you’re considering refinancing to take advantage of this tax deduction, you can learn more about your mortgage refinancing options, including costly mistakes to avoid by registering for our free, six-part video mortgage tutorial.