Skip to main content

Improving Your Options (Posted December 28, 2015)

Just before the Christmas holiday – in fact, exactly a week before, on December 18, 2015 – the President signed legislation that renews the tax deductibility of mortgage insurance (MI) premiums for qualified borrowers through 2016. 

This new legislation is effective for purchase and refinance transactions closed after December 31, 2014. Mortgage Insurance premiums paid or accrued after December 31, 2014, and through December 31, 2016, may qualify for tax deductibility on borrowers' subsequent federal tax returns as follows:

•  Borrowers with adjusted gross incomes below $100,000 may deduct 100% of their MI premiums
•  For borrowers with adjusted gross incomes from $100,000.01 to $110,000, deductions are phased out at 10% increments for each additional $1,000 of adjusted gross household income

Quite often, of course, many buyers immediately stop listening when they hear the term “mortgage insurance” and start thinking about other things like needing to schedule an appointment with the vet to get their cat dewormed or why bread always lands butter side down when dropped.  They lose their focus, and that could lose the sale.  Get them to focus and remind them that those loan options that have mortgage insurance usually have lower monthly payments, much lower down payment requirements (3%), and cancellable premiums.  As it dawns on them that you’re more than a real estate agent – you’re an expert – deliver this coup de grâce (I believe that’s French for “do you want fries with that”) about the tax deductibility, and they just might name their first child after you (or, at least, their next cat – whom I hope has been dewormed). 

Just a couple of reminders to keep in your back pocket:

•  Under the Homeowners Protection Act of 1998, lenders must terminate MI once the loan is scheduled to reach 78% of the original home value – the insurance policy should be automatically cancelled at that time
•  The CFPB, this month, issued a compliance bulletin reminding lenders of this automatic cancellation requirement – even if the home’s value has dipped below the sales price

•  The cancellation rules DO NOT apply to the low-down-payment FHA loans – borrowers are required to pay insurance as long as they have an FHA loan (if the loan was acquired after June, 2013)

Comments

Post a Comment

Popular posts from this blog

Numbers Don't Lie, But Wherein Lies the Truth? (Posted November 21, 2016)

Said with enough conviction, you can make almost anything sound true.   Preface the fabrication with “according to a recent bi-partisan government study,” and you’re three quarters of the way to selling the lie to a lot of people.   Seriously, try this. The next time you’re at a dinner party or having coffee with friends, pepper this little tidbit into the conversation: “I read something really interesting the other day.   According to a recent bi-partisan government study – I think it took them three years to get it all done – middle-aged men who drive either a Toyota Camry or a Honda Odyssey have more testosterone than younger men who drive either a Ford F150 or a Dodge Charger.”   You’ll get some raised eyebrows and looks of mild disbelief, but don’t let that deter you.   Just lift up your hands, palms outward, and say, “I just think it’s interesting, and it makes sense when you think about it” – and then change the subject to something completely u...
Post a Comment
Read more

Couching Your Savings Correctly (Posted July 25, 2016)

I recently read an article online about a gentleman who set a goal to purchase a home and then mapped out very specific steps as to how he would reach that goal.   Personally, I was extremely impressed by his discipline and foresight.   His goal had two parts to it: save $150,000 for a down payment and purchase a home.   Before you choke on your coffee or spit soda through your nose, let me disclose here that the gentleman who is the subject of the article was purchasing a home in the New York City area.   Now that your blood pressure is returning to normal and you’ve spared your freshly ironed white shirt from staining, I’ll give you a breakdown of his plan: •   Starting in 2007, he looked at his annual salary and then took a look at the amount of credit card debt he was carrying; he cut back on as many expenses as possible so he could pay off that credit card debt in the first year.   Touché! •   He kept his lifestyle scaled back to the poin...
Post a Comment
Read more

Dumb as (or Smart as) a Box of Rocks (Posted June 27, 2016)

Obviously, you all want to know what Brexit means to the economy and the housing market specifically.   So do I!   But since my crystal ball is at the cleaner’s, let’s give the Brits and the European Union a little time to work out the terms of their separation and look at something else.   What’s a “fad ”?   With the help of Google, this is what I got as a definition: “an intense and widely shared enthusiasm for something, especially one that is short-lived and without basis in the object's qualities; a craze.” In April 1975, an advertising executive by the name of Gary Dahl invented the Pet Rock.   The idea came from his sitting in a bar with some friends who were complaining about the cost and time required to take care of various types of pets.   He marketed his “pets” by placing a rock in a box cut and shaped like one you would get at the pet store to carry home a puppy or a kitten.   Along with the box and the rock, a booklet was included...
Post a Comment
Read more